Colombia – Guide to Opening a Bank Account
Incorporating a local company is an important step for companies who are serious about servicing the Colombian market. The issue is that many foreign companies do not know the intricacies of the incorporation process which can create delays for on-boarding new staff, entering into commercial contracts, or opening the bank account.
We recently provided a step-by-step guide to help companies understand the incorporation process in Colombia –
Once the company is open, the next step is to open the bank account. This is often the most frustrating part for foreign companies given how easy it can be to open a new bank account in other parts of the world. We have provided a fact sheet to help companies understand the most important questions that arise during the bank opening process.
What is the realistic timeframe needed to open a bank account?
The process for opening a bank account can take from 2 weeks to a month on average. It depends on the speed with which the company provides the documents that are needed and also on the local bank that the company would like to work with.
Will clients receive a USD and Colombian peso account?
A Colombian bank account cannot save or receive dollars directly, when receiving money in a currency other than Colombian pesos, a monetization process must be carried out, in which the currency is exchanged, so that the money enters the bank account in Colombian pesos.
How important is the legal representative to the whole banking relationship?
The Legal Representative is extremely important for the relationship with the bank. There are various processes that require authorization from the company and require the signature and fingerprint of the Legal Representative. In the same sense, for the opening of the bank account, the bank generally requests a meeting with the Legal Representative in its offices.
Can foreigners have access and full powers to control the bank? What is required? How long does it take?
A foreigner can have access to the bank account if he/she has the capacity of Legal Representative of the company or has banking powers provided by Legal Representative to manage the account. To manage the account, the foreigner needs a username and password to access the virtual branch of the bank and have a bank token to make transactions. This is a process that will require the Legal Representative to set up the foreign user with the bank which can take time.
Is it difficult for companies to get credit cards? Do they require a guarantee?
It is difficult to obtain a credit card when the company is new and does not have a credit history. The banks generally require a credit history and financial balances that demonstrate financial robustness. However, the particular requirements may vary from bank to bank, since it depends on each case if they ask for guarantees or not.
What are the typical struggles that companies face with banking in Colombia?
Inconveniences generally arise with the opening of the bank account when the shareholders of the company do not correctly provide the data and documents requested by the bank, or when the Legal Representative is not in the country.
The banks will often request information to know who the final owners as part are of their “knowing a customer” requirements. This can be complicated if there are multiple foreign shareholders and/or holding companies since the bank needs to identify the true owners.
Is there anything else important for companies to know when opening or operating a bank account in Colombia?
It is important to provide the documents requested by the bank promptly, since depending on who the shareholders are, they can request a lot of information. Without this information, it can be difficult to open the bank account even when trying to request from different institutions.
It is important to work with a legal representative that understands how the banks in Colombia operate. They will be able to push when needed, provide realistic time frames around processes, and will be able to explain what can be done or what cannot.
Companies can manage their Colombian operations around the banks approval processes if they understand the reality and timings of getting everything set up. This starts with having a legal representitive that knows how to explain these processes.
Ax Legal works with our in-country partner López & James to ensure our clients can incorporate and operate in the most efficient way possible.
- We provide legal, administrative, and accounting to help our clients operate in the most efficient way possible.
- The result is that clients can operate with small in-country commercial teams while being supported with all their back office needs by a full team of experts for a fixed monthly fee.
- Our clients appreciate this model since they can focus on the commercial aspects while ensuring their overhead if small and manageable.
Ax Legal is an advisory firm that works with foreign companies in Latin America. Our team of legal and commercial advisors have a distinguished track record of helping foreign technology and services companies to grow and operate in Latin America. Over the years, we have worked with starts up, mid-size businesses, and publicly listed companies. The one common factor that connects are clients is that they are leaders in their field, providing innovative technologies and services to the industrial sectors.
To better understand how we can support you in the Region, please contact Cody Mcfarlane at firstname.lastname@example.org