The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Bahamian businesses are blaming stringent Know Your Customer (KYC) due diligence rules and the post-COVID hangover for why it takes an average two months to open a corporate bank account.

Varnett Cornish, principal consultant at VSC Business Services, told Tribune Business she can “relate” to having to wait an inordinate amount of time to open both business and personal bank accounts. This is something she believes has been worsened by COVID-related restrictions, where businesses have had to use online portals to submit their applications.

She added: “I don’t know if they have changed anything since the pandemic came to an end or if it has gotten worse, but I tried several banks and all of them had delayed times. There was one where I filled in the application online and I left because I had somewhere else to go, and I wasn’t getting any feedback from them because no one came out to tell me where they were in the process. So I just collected my documents and left and never went back.”

Aldera Russell, principal consultant at Guanahani Business Consultants, told Tribune Business she never bothered to open a business account because of the hassle. “I just didn’t bother with the hassle, but I can tell you that I know of others that have had a very long delay in getting situated," she added.

"Sometimes it really is that you just can’t furnish what the bank is requesting so there is a strain there, but banks are surely taking a good bit of time to execute new business accounts”. The Central Bank, unveiling the results of a survey of 402 companies and entrepreneurs, said that based on the responses just one-third of business bank accounts were opened within two weeks or less of the application being made.

It added that just 11 percent of accounts were opened on the same day with another 12 percent occurring within one week, meaning that fewer than one in four applications were processed within seven days. Around 40 percent “took more than one month in absolute time” to be opened, with 33 percent of applications taking longer than one month but less than six to be approved.

Ms Russell added: “I don’t know if the pandemic played a part in this but the Government is trying to reduce its attraction to these blacklists and what not, so KYC has become a very big requirement.

"So if you, as a small business owner, want to open a small business after you have started to bloom in the informal sector, the bank is going to ask you for financial reports from previous operations, which you probably never did because you were working from home.

"But expansion happened faster than you anticipated, so you just didn’t keep financial records, so the bank isn’t able to move swiftly with you because you don’t have what they need.”

Failure to obtain a Business Licence could also hold your bank account application up, and some banks “require business plans. Some people don’t think spending $1,000 for a business plan is worth the hassle of getting the bank account. So there are a couple of issues that need to be tweaked out for sure,” Ms Russell noted.

A representative from Thompson & Associates Registered Consulting added: “I got my business bank account when we were in Grand Bahama and things move a lot more quicker there because there isn’t a backlog there.”