This is a sensitive subject. Companies are . "Every day, I still receive calls, emails and messages from people telling me: 'We are once again experiencing difficulties opening bank accounts'", claimed MP (CSV), who has made this issue his hobbyhorse.
According to Mosar, there are two main complaints. Firstly, the requirement for businesses to undergo a new know-your-customer (KYC) procedure, reputed to be onerous, each time they open an account with a different bank. And secondly, the slowness of this procedure. "Between submitting your KYC application and getting the green light, it can take several months. That's far too long compared with the procedures in force in other countries.”
And yet it has been more than two years since the subject emerged in the public debate. Since then, progress has been made, admitted Mosar: "There has been a slow realisation, both on the part of the banks and on the part of Luxembourg politicians, that it was impossible to continue as we were, on pain of creating a real problem for the smooth running of our economic system. Efforts have been made over the past two years, notably by the Luxembourg Financial Sector Supervisory Commission (CSSF) and the banks. But we have not yet found a solution that fully satisfies me."
ABBL providing guidance
The Luxembourg Bankers' Association (ABBL) said it has "taken this issue seriously” and is working on four fronts:
- Acting as a facilitator between supply and demand. The ABBL connects businesses with banks and banking service providers in Luxembourg. at banks and other service providers to help businesses access this complex ecosystem.
- Educational initiatives. The ABBL has begun producing a series of practical guides. In December, it a guide for businesses on opening accounts. It aims to raise awareness of the banks' obligations and explain to clients why additional documents or information may be requested.
- Increased training efforts. The ABBL has joined forces with the House of Training to offer specialised training for compliance officers. Together with other associations, it has also launched a new certification scheme for compliance officers in the banking and fund sectors.
- Ongoing dialogue with the regulator. The ABBL is in dialogue with the CSSF to promote a "consistent and proportionate" application of know-your-customer regulations. The aim is to deepen cooperation on training and the application of regulations.
CSSF: nine complaints in two years
While the difficulties associated with opening accounts are much talked about, they remain poorly documented. The ABBL said it was "difficult to quantify, insofar as there is no obligation for our members to report on refusals to open accounts or on difficult cases, either to the ABBL or to the CSSF". Based on discussions with stakeholders, the association added that this problem seems to "mainly concern SMEs, startups and alternative fund promoters".
Of the more than 100,000 companies registered in Luxembourg, as well as the thousands created each year, how many problems have been reported to the CSSF? "Over the past two years, the CSSF has been contacted nine times by legal persons who have been refused a bank account", the regulator said. It pointed out that, by law, it can only receive complaints from customers of entities under its supervision. An individual wishing to open an account is not yet considered a customer.
BGL BNP Paribas and Spuerkeess declined to comment for this article and referred to the statements previously issued by the ABBL. Raiffeisen Bank said it had "no specific statistics on the percentage of or reasons for refusals to open accounts for legal entities in 2024".
In the end, onboarding refusals are relatively low.
"The few unsuccessful applications to open a business account are mainly due to incomplete applications [with questions] remaining unanswered by the prospect or concern companies that have no activity in Luxembourg," commented Post Finance. Banque Internationale à Luxembourg said: "Once all the information and documents have been collected in close collaboration with the prospects and after our analysis, the number of onboarding refusals is relatively low.”
Among the stories circulating in the financial sector is that of a medium-sized company providing a blockchain-based technological infrastructure. Despite months of effort, it was unable to open a local bank account in Luxembourg and ended up leaving the country. Despite having raised substantial funds, local banks refused any involvement with blockchain or crypto, as they were deemed too risky.
Is this kind of case exceptional? Mosar is undaunted: "We're dealing with a one-off problem that could have structural consequences. If companies can no longer open accounts, they will stop coming or end up leaving. If Luxembourg acquires the reputation of a country where it is difficult, if not virtually impossible, to open a bank account, people will go elsewhere! This is particularly crucial for startups.”
It is not necessarily desirable for companies to turn en masse to alternative solutions.
, CEO of the Luxembourg House of Financial Technology (Lhoft), was more nuanced in his statement: "There were a few problem cases three or four years ago, but this problem no longer exists today.” According to Zubairi, alternative payment service providers, such as Olkypay, now offer solutions tailored to SMEs. "Good-sized regulated entities and payment institutions don't have any major difficulties. It's a shame that accounts aren't necessarily opened with Luxembourg banks, but that's the way it is."
Despite this, the Zubairi believes that the current situation remains unsatisfactory: "I know that all the Luxembourg banks are working on this, but they still need to make an effort to make it easier to open accounts. From the point of view of financial stability and risk management, it is not necessarily desirable for companies to turn en masse to alternative solutions for their banking needs. Let's not forget that these options do not offer, for example, deposit guarantees and other similar protections."
KYC: pooling procedures
Mosar is calling on the banks to focus their efforts on pooling KYC procedures. In his view, this represents "the ideal solution". "For existing customers, data transfer could be simplified. As soon as I authorise my bank to transfer my data, I don't see why this instruction can't be carried out. It's quite incomprehensible that we haven't made more progress on this. Having said that, I remain hopeful that progress will be made on the I-Hub platform in the coming months.”
Other issues raised by the CSV MP include the length of procedures ("for me, an account should be opened no later than one week after the application") and transparency on the reasons for refusal. Is the account considered too expensive? Is the customer too risky? "If a bank refuses to open an account for a company that has direct or indirect links with arms production, I can understand that. But it should make that clear, instead of blaming the regulations or the way they are applied by the CSSF."
In 2024, 80% of professional accounts were operational in less than two weeks.
Regarding the time taken, Post Finance said it has "simplified the onboarding procedure, in particular to make it easier for customers to understand the documents they need to provide". In 2024, "80% of business accounts were operational in less than two weeks". At Raiffeisen, "the average onboarding time varies from four to five working days for a complete file, but can be significantly longer for complex structures". In principle, said the ABBL, "a bank account can be opened within a reasonable period of time, provided that all the required documents and information are received from the customer".
As for transparency, the CSSF pointed out that "a bank is not obliged to indicate why it does not wish to enter into a relationship with a customer, and the same applies to the termination of a business relationship". Both Post Finance and Raiffeisen stated that they make every effort to provide explanations to rejected customers.
On the political side, Mosar promises to remain vigilant. "If, despite dialogue with all parties, we do not find a satisfactory solution, I do not rule out, and reserve the right, to table a bill to extend the obligation already in place for private individuals to legal entities. The government could also act on its own initiative.
What is holding up the opening of company accounts? That will be explored in greater depth in a follow-on article, which will be published later today.
Read the original French-language version of this news report /