One of the biggest problems for foreigners in China is opening up a bank account. The process doesn’t just involve a prolonged and disturbing document preparation but also an investigation by the bank into their background. Even after successfully opening an account, they might not be able to utilize certain functions. The first thing needed is that foreigners are educated on the various bank accounts that they can open in China as well as their pros and cons.
Reference is made to foreign exchange accounts, not RMB accounts (Not every foreigner is allowed to open RMB accounts in China, it depends on many factors, such as nationality, location, bank).
There are four options for foreign entities or legal persons (body corporates) that wish to open a foreign exchange account in China.
OSA accounts are handled in the same way as accounts opened in foreign banks. The above-mentioned banks have independent OSA departments, separate from the onshore banking business.
Chinese investors to manage their foreign exchange fund.
In SAFE’s 2009 rules, is expounded that such non-resident account (called “NRA”) are not OSA accounts, creating now another option for foreign investors to open forex accounts in China.
However, what is the difference between OSA accounts and NRA accounts. It must be noted that in most respects, there are really similar to the perspective of account holders.
The money in NRA accounts is totalled in calculating the short-term foreign debt balance of their opening banks, but fund in OSA accounts is not so totalled. This will give OSA banks unlimited power to open as many foreign exchange accounts as they wish and are not restricted by foreign debt balance limitation.
Foreign individuals cannot open NRA accounts but can open OSA accounts.
Nearly a decade ago Hong Kong banks welcomed companies that functioned on a virtual basis outside of the HK domain. Taking the territory advantage of Hong Kong, businessmen often travel between Hong Kong and China mainland for business. Since Hong Kong bank account allow them to freely transfer money overseas, no fear to China mainland’s strict restrictions on exchange currencies. However, as you have noted, those days are long gone.
The banks in Hong Kong are governed by the Hong Kong Monetary Authority, which has issued strict guidelines as to what constitutes as an appropriate bank account application. Unfortunately, these guidelines are set by two major international initiatives; the OECD Tax Co-operation 2010 and FATF black-list 2012. What these two publications and succeeding compliance accomplished was to limit the ability of virtual companies to move money around the world (i.e. reduce money laundering) and to a lesser effect reduce tax evasion.
If you have a Russian or American passport, this only complicates things if the OECD and FATF requirements are not satisfied first.
Hong Kong is a global financial center and you are able to open the bank account of other countries as well, and the bank doesn’t require your physical visiting. These bank accounts also serve your purposes for ongoing global transactions.
There might be some controversial discussions on the physical visiting.
Many foreigners regard opening a bank account in China as fairly frustrating. In most cases, the bank account opening checklist provided by the bank does not clearly demonstrate substance, which is very important in global business these days. In China, the wording regulations and the implementation of laws on different levels among cities make it much more unsettling.
Last but not least, Corporation China is experienced in bank account services for foreigners, we know the bank’s exact requirements, which are not particularly stated on the checklist. If you need any services on bank account opening, feel free to contact to us.