To create a business in the Grand Duchy, you must open a bank account. However, many players in the field report that the process is proving increasingly difficult to accomplish. Which could weigh on the attractiveness of the country.
One of the first challenges, for a country that wants to be attractive, is to facilitate the procedures related to the creation of a business on its territory. Luxembourg, without doubt, is a favorable territory for those who wish to develop their business in Europe. The efforts made by the government to attract players there bear witness to this. Dfor several months, however, we have been talking about increasing difficulties encountered by those who wish to set up their business there, domicile a fund or even a holding company there to open a bank account.
The situation concerns many actors, accountants, lawyers and even elected officials, like Laurent Mosar (CSV). He echoed these fears within the Chamber of Deputies during a parliamentary question, specifying that “ the competitiveness of our financial center is at stake”.
The weight of regulation
Would banks be reluctant to welcome new customers? Although these fears are not supported by statistics, several explanations can explain the difficulties encountered by those wishing to open an account (or at least the longer opening times to complete the operation).
Firstly, banking players are subject to verification requirements linked to the fight against money laundering and the financing of terrorism heavier… The documents required as part of an account opening procedure are more numerous, the analyzes more in-depth, the banks more cautious. All this leads to longer delays and higher costs. In Luxembourg, where the reputation of the market is a sensitive subject, these questions of due diligence are taken very seriously. Especially since the structures put in place, such as alternative funds or holding companies, constitute complex structures, with multiple ramifications, which must be able to be investigated.
A commercial choice?
Which brings us to another explanation put forward at the heart of the debate. The costs generated by opening an account which, ultimately, bring little return to the bank, may suggest that certain players are not competing for customers. The lack of competition, due to a limited number of Luxembourg banks, is also mentioned in the context of this problem.
The requirement for an IBAN LU
As part of this debate, the requirement to present a Luxembourg bank account (the IBAN of which begins with LU) to the notary recording the creation of the company or vehicle was also discussed at length. A constraint that has no reason to exist. There is no legal basis for requiring a Luxembourg-only IBAN, the Ministry of Finance has confirmed in his response to the parliamentary question.
In practice, however, things are different, with some notaries experiencing difficulties in obtaining a list of signatures or blocking certificates compliant with Luxembourg laws, necessary as part of the procedure, from foreign banks. .
Solutions in sight
It seems that it is indeed more complicated to open a bank account in Luxembourg. The situation is all the more worrying as the process can be faster abroad.
How to remedy the situation? Several avenues have been put forward. On the one hand, it is a question of better guiding candidates for business creation towards partners ready to welcome them, particularly with regard to the activity they wish to develop. In this perspective, theABBL (Association of Banks and Bankers of Luxembourg) says it is working on a list of establishments wishing to join this process.
On the other hand, there is an opportunity to simplify procedures related to due diligence, or at least to improve the effectiveness of verifications, by using technology, better sharing of data between actors, for example. Exploring such an avenue should lead to a reduction in the costs assumed by banks in terms of compliance. The need to use a Luxembourg IBAN must be questioned or abolished in practice.
Towards an obligation?
Added to these solutions is also the idea of forcing banks to open a bank account. Until now, a bank is free to decide whether it wishes to enter into a relationship with a client or not, depending on its commercial or risk management policy.
By accepting a client, it undertakes to carry out a set of checks relating to this client. Establishing this obligation, therefore, will involve other questions.
Until now, a bank is free to decide whether it wishes to enter into a relationship with a client or not, depending on its commercial or risk management policy.
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