Georgia Corporate (Bussines) Bank Account Blocked - My personal experience - Alternatives

[nowheretobe]

Hello everyone,

Since I learned many things from this forum I wanted to share my experience with TBC bank (and other banks) in Georgia and closing of my business account.

I couldn't find much information on the subject and it varies case by case but here is what happened to me:

My business is in affiliate marketing.

In June 2019, with the help of a Lawyer, I made a company in Georgia with IT certificate, opened business bank account and personal bank account in TBC Bank.

Until September I didn't really have any activity so business account was pretty much just waiting there. Then small amounts started to arrive from all around the world (but nothing from blacklisted countries or places like Seyschelles) . Money coming was mostly from 1st world countries. France, UK, USA etc. Amounts were not so big, nothing exceeding 10k and avg. is 1-2k USD.

After around 15-16 bank transactions in and out, one day I recieved a message from the bank asking KYC questions. I replied them with the best of my knowledge and there were nothing risky with my business (No adult, no drugs, no illegal stuff, nothing)

After few days of sending out my replies, bank sent me a message from the online platform and said they'll close my bank account in the next 10 days due to "internal reasons". (I'm attaching some parts of the messages)



I called them but no avail, according to the georgian law, they are allowed to do whatever they want. And looks like, money coming from abroad is kind of risky for them.

It was a killing blow for my company and I looked for some proper alternatives and I decided to go with a mix of Transferwise, Paypal and Payoneer. Now this process is crippled me but I'm still be able to recieve money from many partners.

Transferwise can accept Swift USD payments from many first world countries and so far it worked good for me. I kinda want to have a real bank account but looks like, to open a business bank account in Georgia, you need to reside there or you need some good connections - transactions inside the Georgia. If you are not doing any business in Georgia, they just block you. At least this is what bank clerks and my accountant told me. The lawyer who helped me to form the company is ghosted on me, he is not returning my messages and my calls.

Other solutions I could find like using a mediator to open a real offshore account (in the islands) were too risky or wouldn't worth it.

Few months after these events, I went to Georgia to take care of some business. I went to TBC bank and wanted to ask about the reason and try to re-open my accounts. Clerks were helpful, after 30-40 mins on the telephone with some people, they told me the same "due to internal reasons your bank account is closed".

Then I went to Bank of Georgia and applied for an account there. However after 1-2 days they sent a KYC questioneer. I filled it but they also declined to open a bank account for my business there. (Again, nothing risky, nothing illegal, just international affiliate marketing)

In the end I spent extra money, lost some clients and time to solve this problem and it's not 100% solved. Some people told me to open an account in Armenia or other nearby countries but it's really too much effort and outcome is not known since I might have the same thing someday in those countries.

Currently I'm going with the EMIs i mentioned above, paying hefty transactions money on some of them. They are not really offshore but since all is under company name, I guess that's okay.

So if you have any similar experience, or know what would be the best solution please reply the thread and let me know.

Maybe some of the people here will laugh at me and tell me that there are other solutions out there but I don't really believe it anymore

 

[JohnLocke]

Thank you for sharing your experience with us and welcome to OffshoreCorpTalk - your contribution is much appreciated.

 

[dlttrading]

I think the reason is that you don´t pay any taxes in Georgia and the bank does not earn enough on your 30 transactions per month in and out. So why should they keep you using their trusted reputable bank when you move money internationally with probably low cost banking tarife

 

[Tax Cow]

Your work went to waste for a simple mistake.

Affiliate business is not a problem if you receive funds from 2-3 sources. But AML compliance does not like to get showered with "payments from around the world" even if the amounts are just 4 figures.

Wherever you open your next account for affiliate business, in Georgia or outside, do not accept payments from more than 2-3 3rd party sources, at least initially, or you'll piss off compliance and get your account closed.

Hope this tip helps!

 

[nowheretobe]

I think the reason is that you don´t pay any taxes in Georgia and the bank does not earn enough on your 30 transactions per month in and out. So why should they keep you using their trusted reputable bank when you move money internationally with probably low cost banking tarife

I don't think that's the reason since I do pay taxes in Georgia but thanks for the insight.

Your work went to waste for a simple mistake.

Affiliate business is not a problem if you receive funds from 2-3 sources. But AML compliance does not like to get showered with "payments from around the world" even if the amounts are just 4 figures.

Wherever you open your next account for affiliate business, in Georgia or outside, do not accept payments from more than 2-3 3rd party sources, at least initially, or you'll piss off compliance and get your account closed.

Hope this tip helps!

Thanks for the tip, sometimes you can't just know enough about these things I guess. It doesn't really make sense to me but you might be right. However, I heard that many other companies had their accounts closed for similiar reasons. Maybe it was something to do with TBC bank ex-owner laundering money and after that goverment seized the bank. More here: Founders of Georgia’s TBC Bank step down in wake of money laundering charges - Emerging Europe | Intelligence, Community, News

 

[khinkali]

I do not think that Georgian banks have a problem with Georgian businesses who are actually exporting services from Georgia.

@nowheretobe The clue is in your first screenshot: "The company's connection to Georgia in the field of business activity".

The company happens to be registered in Georgia but if you're a resident of Germany, running a business from Germany and doing work from Germany for non-Georgian "customers" (i.e. merchants or affiliate networks) then Georgian banking doesn't seem like a good fit.

I'm surprised your company was approved as a Virtual Zone Entity. Was it some time ago?

 

[Tax Cow]

Compliance must be ready at all times to explain the business purpose of client transactions when an auditor comes asking. With too many payment sources, it makes business sense to close the client's account instead of spending too much time on paperwork.

Such compliance BS is a disgrace and an unfair disadvantage to small business imposed by the state. Banks won't go far enough to ensure that honest SME's can maintain their accounts, as they do to keep their blue chip clientele.

I'll always find a hole to squeeze through, because I can afford to spend 16 hours a day on banking compliance penetration.

The ultimate result of AMLD5 and AML BSA is a stressed out SME ecosystem that spends too much time looking for payment infrastructure, satisfying their banks and EMIs with documentation. While real launderers can charge a premium.

 

[cyprus123]

It's very simple: you need substance in Georgia: staff or an office. Also suppliers, customers or at least some connection to Georgia. Otherwise the bank will close your account or not even open. You need professional help with such cases, it's not enough to just visit a branch and explain the situation.

 

[Btraveler]

Compliance must be ready at all times to explain the business purpose of client transactions when an auditor comes asking. With too many payment sources, it makes business sense to close the client's account instead of spending too much time on paperwork.

Such compliance BS is a disgrace and an unfair disadvantage to small business imposed by the state. Banks won't go far enough to ensure that honest SME's can maintain their accounts, as they do to keep their blue chip clientele.

I'll always find a hole to squeeze through, because I can afford to spend 16 hours a day on banking compliance penetration.

The ultimate result of AMLD5 and AML BSA is a stressed out SME ecosystem that spends too much time looking for payment infrastructure, satisfying their banks and EMIs with documentation. While real launderers can charge a premium.

Hello @xzars totally agree. It's absolutelly disgrace on that