Foreigner, stay away!

We received £15K from Oxygen Accelerator. Well, on paper at least. We do not have the money on our bank account for one simple reason: we don’t have a bank account. For us as foreigners, it’s next to impossible to open one. Let me explain.

Anti-money laundering legislation in the UK states that one needs two things to open a bank account:

1) A passport

2) A proof of address.

The first part is easy, we all got our passports with us. But for a foreigner not living permanently in the UK, it is almost impossible to meet the second requirement. The address proof appears to be the government’s silver bullet against money launderers. Apparently the one single thing that distinguishes money launderers from regular people is that money launderers don’t have a place to live. For a foreign student or businessman, this legislation makes it almost impossible to open a bank account.

You see, in order to prove your address you have to show an utility bill with your name and address on it. No, your lease agreement won’t do the trick: it has to be a bill from one of the national service providers such as British Telecom or British Gas. No, a notarized confirmation of your address won’t do the trick either. But then, how could somebody who does not have a permanent home in the UK get an utility bill? Especially when they are there for only three months?

Although we already have the internet connection in our rental house, we thought that we would get another one, just to get the utility bill needed (a month later, but still), then a bank account and then that £15K we have waited so anxiously for. With installation and monthly payments it would cost us £145 for three months. Not cheap but we would get this bank account sorted out at least. Right?

Business also needs to have necessary conditions to succeed:)

Well, not really. The thing is, there are three of us assigned as Directors of LogistIT Ltd – me, Jüri, Tarmo – and EACH ONE of us would have to prove our address in order to get a bank account. But there can be only one name on the Internet contract (and for that matter – whichever utility contract we are talking about). Therefore we would have to produce three different contracts (with three different service providers), one for each name. Not only is this pretty expensive, but it just feels totally absurd to have three contacts we actually don’t need.

Our Romanian friends, StoreBeez’s, are even in worse situation than we are: in addition to lacking an utility bill they also do not have passports. Not even back in Romania. They only have their national ID-cards which were sufficient enough to get them into the UK. However, these ID-cards are useless in banks, only passport is good enough to identify oneself there. Apparently the harm one can do having a bank account dwarfs the harm they can do by being physically present.

I think with this kind of crap, the UK goverment is denying their country a whole lot of good business. It irritates me that instead of doing actual work I have to deal with all this bs just to open a bank account. In our case, we don’t have the choice, as probably don’t have the international students in Cambridge, Oxford and other universities. But as for lot of other start-ups or business people, I think they would “flee” the country as soon as possible to some place where they feel more welcomed.

What is the upside for Britian to have so tough laws? Is really the lack of a place to live the one big difference between somebody laundering money and somebody trying to do legitimate business? I don’t think so. The current legislation is like curing a sick fingernail by cutting off the hand. And worse than that – I’m sure the real money launderers will find a(n easier) way over the utility-bill-requirement. But is sure causes a lot of headache to foreigner students, businessmen and anybody else coming to the country and in a need to establish a local bank account. With these laws the Britons hinder the only kind of immigration they actually should welcome.


9 thoughts on “Foreigner, stay away!

  1. Wow, and I thought the bureaucracy in Australia was bad… 🙂 But it seems it’s nothing compared to the UK! Good luck sorting it out!

  2. Couple of months ago I read an article about this problem. EU Commission has complained about this for number of times already. So there is hope for people in your situation. It is funny though that Brussels is more worried about it than UK (even though they are dreaming of a Silicon Valley). Link to the article here –

  3. I think this is one of those things which could be solved by banks by doing just a little bit of lobbying with the government. But they just don’t care – they are well off already. Did you know that the banks in the UK do not provide currency exchange? Again, probably a market small enough not to be attractive, just as foreigners…

    Banking is not the only example of the red tape. F.e. when you buy lenses, you are forced to have your eyes checked right there (not gratis, of course) – no matter that you already know which lenses you need or whether you already have a recipe. It’s just the way it is in the UK.

    Allan, can you please send me the forementioned article, I don’t have a subscription to FT.

  4. FT, Brussels ready to legislate over bank access, By Nikki Tait in Brussels, July 18, 2011 4:09 pm

    European policymakers will consider legislating to ensure access to affordable bank accounts for all European Union nationals over the next 18 months, if the banking industry does not voluntarily extend services to the bloc’s 30m adults without access to the sector.

    The European Commission unveiled a recommendation on Monday urging member states and their banking sectors to ensure that reasonably-priced accounts are made available regardless of a would-be customer’s country of residence or financial situation.

    Michel Barnier, EU internal market commissioner, insisted that he expected countries to “take measures” over the next six months, to address the current situation. “The situation will be reviewed in a year’s time,” an EU official said. “Should it remain unsatisfactory, the commission will consider proposing binding measures to meet its objective.”

    But consumer groups accused the commission of moving too slowly and missing “a golden opportunity”.

    “The snail’s-pace approach to giving people access to a bank account contradicts the EU’s efforts to expand e-commerce,” said Monique Goyens, director-general of Beuc, the European consumers’ organisation. “It’s a matter of fact that, without a bank account, shopping and doing business online is virtually impossible.

    “Having a bank account is a basic right. No bank in the EU should be allowed to turn down a person who wants to open an account”.

    The 30m adults who are estimated not to have bank accounts in the EU amount to about 7 per cent of the bloc’s consumers. EU officials believe that almost a quarter of these people have been turned down by banks – for reasons ranging from residency requirements to proof of income, credit history or identity requirements.

    Problems are also prevalent when lower-paid workers or students move between EU countries and want to set up an account in a new, possibly temporary, location.

    Mr Barnier said the commission’s approach – a recommendation coupled with the threat of legislation – mirrored its stance over transparency of bank charges. He said that he expected the banking industry to come back with improvements by mid-September or face tougher measures. He said the cost of running a basic account varied widely across the bloc and the aim was to make charges “easy to understand and comparable across all countries”.

    “My approach here is to encourage people to work with us, provided there is a response,” he said.

    But the commissioner insisted that he was willing to legislate if necessary. “Rest assured, I will not hesitate to act. Member states have six months to tell us where they with their banking sectors . . . [After that,] 12 months is not that long to wait,” he said.

  5. Kind of familiar in the US, though not that bad. Had a lot of trouble opening and closing accounts there. There’s one good thing about all this crap in the UK, AUS and the US – makes you kind of value our homeland Estonia a bit more!

  6. Just an idea. Log on to the estonian commercial register, change the management so that you have only one member of the board. print out the extract and use it in the bank. Then change it back. Or if you do not have the bill, then contact an estonian who has a bank account there, sign an agreement that he/ she will act as the payment agent. If you need some names, then give me a call.


    • I’m afraid that you can’t access the UK company in the estonian commercial register. But your second idea might be useful. If everything else fails, I will contact you soon:)

  7. Pingback: Britons, food and attractiveness « Lauri in Oxygen Accelerator, Birmingham, UK

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