Client Business Profile: What the Bank Needs to Understand

The bank applies a risk-based approach and compares payments with information about the client, its activity and risk profile. The owner should therefore explain the business model clearly: what is sold, in which countries, who pays, what amounts are normal and what expenses are typical for this type of activity.

The client business profile must correspond to actual agreements and payments. If a company sells IT services to European clients, the bank expects agreements for those services, invoices, payments from the relevant counterparties and understandable expenses. If the business starts a new line or enters a new country, the director explains to the bank in advance the changes that will affect cash flows.

The bank also establishes the ultimate beneficial owners, ownership structure and persons managing the account. For the owner, this means that corporate documents, Unified State Register data and the information held by the bank should correspond to each other. Current data simplify further work with the account.

The bank assesses the client throughout the business relationship. The director therefore updates information about owners, the manager, address and activities when they change. If turnover rises sharply because of a new large contract, it is useful for the owner to have the agreement and a short explanation of the nature of the receipts before the first significant payment.

The international KYC principle - "know your customer" - primarily concerns the bank's duty to conduct proper due diligence on its own client. In parallel, the entrepreneur carries out ordinary commercial due diligence on a counterparty: before making an advance payment, it is sensible to establish the company's registration details, director or signatory, available ownership information, website, activity and bank details, and to obtain the agreement, specification, invoice and documents sufficient to understand to whom and for what the money is being transferred. This reduces the risk of the partner failing to perform and at the same time gives the director ready facts for answering the bank about the recipient of the funds.

Foreign-Currency Payment: Agreement, Counterparty and Documents

For a specific payment, the director needs documents explaining its economic substance. For a receipt from a client, this may be an agreement, invoice, acceptance certificate or another performance document. For payment to a supplier, it may be an agreement, invoice, order and transport or customs documents depending on the transaction.

For a large, unusual or higher-risk payment, the bank may request additional information about the source of funds, parties to the transaction, economic purpose of the agreement and reasons for a change in normal turnover. A counterparty is not required to provide the client with every non-public document merely because the client's bank requested it where no such duty exists under law or the agreement. At the same time, the bank is not required to accept an unsupported explanation: it is entitled to request from its client the information necessary for proper due diligence and, in the cases established by law, is required or entitled to refuse to carry out the transaction. It is therefore profitable for the director to agree a reasonable set of corporate and goods-related documents with the partner at the agreement stage.

Payment history matters. When the bank sees regular receipts from real clients and understandable expenses, it is easier to assess a new payment. It is therefore profitable for the director to use the corporate account for business payments and keep documents for each significant transaction.

For a foreign-currency advance payment, it is useful for the director to have not only the agreement and invoice but also a file on the recipient: a registration document or extract from an official register, details of the director or other signatory, available ownership structure, website or other evidence of genuine activity, specification of the goods or service, delivery terms and bank details. The bank itself determines the sufficient amount of information taking account of the transaction risk. This package is needed not "for the bank for the sake of the bank": it is the same information that a prudent entrepreneur collects before an advance payment to know to whom the business is transferring its money.

The source of money that the owner contributes to the business as a loan, contribution or payment of corporate expenses is also important. The bank may ask about the source of such funds and the economic basis for the contribution. When the director and owner use the correct agreement and payment purpose from the outset, the movement of funds looks as clear as an ordinary payment from a client.

For regular international payments, the director can agree standard documents with the bank in advance. This is particularly useful for monthly payments to the same supplier or regular receipts from a large client where the substance of the transaction remains the same.

How to Prepare a Payment for Financial Monitoring without Unnecessary Delays

Before a large international payment, the director checks whether the transaction corresponds to the client business profile, whether the agreement and invoice are available and whether the payment purpose is stated correctly. If the bank already knows about the new activity or new major counterparty, a request is usually easier to explain.

It is useful for the owner to have a reserve corporate account if the business depends on daily international settlements. This is a continuity tool for other ordinary expenses - salaries, taxes, supplies or current payments - while the main bank clarifies a particular transaction. A reserve account is not used to bypass the review of a specific payment: each bank conducts its own financial monitoring and assesses documents under its own procedures.

UBC specialists support compliance procedures and interaction with a bank's financial monitoring team for foreign-currency payments and payments within Ukraine. The work may include the client business profile, review of the agreement and payment purpose, a counterparty document package, explanation of the source of funds and economic substance of the transaction, and preparation of responses to additional requests. For payments in euros, US dollars and other currencies, account is taken of the fact that information may be required not only by the client's bank but also by other banks in the payment chain. The result is fewer repeated requests, faster communication and a payment prepared as fully as possible in compliance with AML and financial-monitoring requirements.

If the bank requests additional information, the owner assesses the contractual payment deadline and gives the counterparty a realistic date. For critical payments, it is worth agreeing timing with the bank in advance and allowing time for review. This is especially important for an advance payment for goods, salary payment or tax payment where a delay has direct financial consequences.

For a new account, the owner describes in advance the expected monthly turnover, main countries, typical clients and average payment size. If the actual history later corresponds to this information, the bank better understands the client's ordinary activity. As the business grows, the director updates this information and explains the reason for increased turnover with new agreements.