Will opening a bank account for a company become child’s play? , the process currently poses some challenges, which explains why the Luxembourg Bankers’ Association (ABBL) and the financial sector regulator (CSSF) want to make it easier.

Patrick Want, the accountant behind a petition on the subject, agrees: “We see banks refuse to open accounts for holding customers because they don’t think it’s worth the effort. They’ll close accounts or add exorbitant KYC [Know Your Customer] fees of up to €5,000 a year.” Why? “It’s very opaque. I get the feeling that as long as you don’t make any money for the bank, they’re not interested in you.” For the accountant, there are two solutions: open an account with Revolut (an online bank), or in another country. “If the company is based in Luxembourg, most of the time they don’t want to.”

This also applies to startups, adds finance committee member (CSV). “There are two problems. One is regulation. Many startups won’t have all the necessary information on the documents they need to provide: beneficiaries, origin of funds, etc. And there is the issue of profitability. The account represents an operating cost for the bank. And on the other hand, they earn nothing from managing this account.”

The problem affects the country's competitiveness, as one branch manager .

Mosar put the subject on the agenda of a finance committee meeting in the chamber of deputies on Friday 30 June. The ABBL and the CSSF have listed their proposals.

1. Human resources

“Increasing regulatory pressure has a cost,” explains ABBL secretary general Camille Seillès. “In , we estimated the cost to banks at €550m, of which €80m was for AML compliance. When a bank accepts a new customer, it incurs AML compliance costs. Not just in terms of IT, but also in terms of human resources.”

These profiles are in short supply. “We don’t have any figures, but there is a major shortage of compliance profiles.” The solution lies in “making the country attractive”.

Training is one option. “There’s a world of difference between an SME and a complex structure,” Seillès explains. “Some hedge funds find it difficult to open an account because of the complexity of their structure: there are several intermediary companies and you have to carry out in-depth due diligence. Neither do all banks have the resources for it, and for those that don’t it wouldn’t be reasonable to take the customers on board at all. It’s a commercial decision linked to the bank’s available funds and risk policy.”

In response, the ABBL offers training courses for compliance officers.

2. Raising awareness

“Entrepreneurs do not always understand the bank’s obligations,” says the ABBL secretary general. “The amount of information you have to provide can be surprising. But it’s not for the sake of filling filing cabinets. It’s because the bank itself has professional obligations, under threat of sanctions.”

This is why the ABBL has created , together with the House of Entrepreneurship (HOE). The document summarises the steps involved, from the customer questionnaire to keeping the information up to date.

3. The right partners

Companies “often forget that there are more than 120 banks in Luxembourg. More than the names you’ll see on a walk through town”. The ABBL is preparing a list of establishments “ready to welcome” each type of customer.

The list will include dedicated contacts and is scheduled for release by 7 July.

4. Simplification

The CSSF will also play its part. “Banks must prove that they meet certain conditions,” says Mosar. “Claude Marx [director general of the CSSF] has said that the procedure will be reviewed. This is to facilitate the steps that banks have to take at the CSSF level.”

When asked, the CSSF referred the matter to the ABBL. “The application of the AML framework and the identification requirements are the subject of ongoing dialogue with the regulator,” explains Seillès. “The aim is to ensure that they are applied consistently and in proportion to the risk.”

5. Open finance

“Another area for consideration is administrative simplification,” the secretary general continues. “I’m optimistic about open finance and data sharing between economic operators in general. The challenge for a bank is to have the right data at the right time. In the future, it should be easier for a bank to document a customer, since it will be able to rely on the KYC already done by another institution.” (The European Commission .)

Towards an obligation to open an account for businesses?

“I’m pleased that the problem has been recognised by the players involved,” says Mosar. “I had the impression that, until now, everyone was passing the buck.” Mosar believes that “these proposals are a step in the right direction.”

Are they enough to solve the problem? “The future will tell,” says Mosar. “I think we need to think about making it compulsory for banks to open accounts for legal entities.”

Want agrees: “Make it compulsory to open a minimum account, so that you can receive money and pay bills.”

Mosar says that he has given himself until this autumn to see if the measures have had an effect. And he assures us that he will keep a close eye on the subject.

The CEO of Lhoft, , proposed putting an end to the need for a Luxembourg IBAN, as demanded by notaries.

This article was originally published in French in . It has been translated and edited for Delano.