Managing clients money (bank rules)

starricz

Free Member
Mar 23, 2019
8
1
Hi all.

A couple of years ago, I wanted to start up a "Daily Pay" service where we would pay freelancers and uber drivers daily for a commission however, UK banks refused to open us up a bank account for this. The reason was that they cannot grant us a business account that involves handling clients money. We tried numerous banks, we said that we would deposit hundreds of thousands, etc. The banks just wouldn't have it!

We were never given a reason for this and to this day, still don't understand how some companies bypass it.

My question here is how on earth are companies opening business accounts for certain types of business

1). Pay day loan companies
2). Payment Gateway companies
3). Daily Pay services

The list goes on...

These are all "high risk" companies that involve managing/handling clients money yet there are thousands of them out there and the banks are giving them accounts.

Surely, there must be a way of having a legitimate business account that allows you to make hundreds-thousands of transactions per day and process money on the behalf of clients? In a sense, it's no different to paying staff from your business account.

Any knowledge on this matter would be greatly appreciated as I just don't know what to put into google to find any answers to it.
 

MOIC

Free Member
  • Nov 16, 2011
    7,391
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    myofficeinchina.com
    Money Laundering Act is probably the reason.

    Banks MUST know that the account holder knows the identity of ALL receivers and senders of funds through a bank account and that they comply with regulations.

    Try to send or receive funds from a solicitor and if they do not know you (sometimes if they do know you), they will ask for your passport for verification.

    Handling and depositing funds for thousands of your clients, is just not going to cut it as a new business.
     
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    starricz

    Free Member
    Mar 23, 2019
    8
    1
    Thanks for that and yes, learned that from my solicitors a little while ago (even though I have been using them for years)

    But companies are doing it is what I'm saying, I understand that there are rules and regulations. But how are these companies getting past them and proceeding to open accounts?

    You mentioned solicitors which are a good example, how are they doing it? New firms are opening every day, I would be prepared to gather ID from all clients but I'm not being given that opportunity.
     
    Upvote 0
    Surely, there must be a way of having a legitimate business account that allows you to make hundreds-thousands of transactions per day and process money on the behalf of clients?

    I think what you are asking for is aggregation - the position of counter-party in a transaction where you are not actually supplying the goods. This means you have liability for all these transactions even though you neither supply the goods no have proper title over the payment. If you had hundreds of thousands of transactions you would need the equivalent capital deposited in order to cover the risk. Not many businesses want to do this and not many banks want them to have it either (it puts the bank at risk if you disappear).

    Instead, the master merchant obliges each sub merchant to have an account and the risk goes with the sub merchant. At least, this is how Nochex does it.
     
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