With ever-increasing KYC and AML obligations and new VISA and VAT regulations for distance selling, our clients are looking for ways to set up an online business in a jurisdiction that is both a) bank-acceptable and processing compliance requirements, and b ) tax efficient and easy to manage. The wish list could also include confidentiality protection, fast corporate bank account services and many other benefits that are actually quite difficult to combine in a simple structure - but let's try!
KYC/AML transparency for acquirers Ultimately, acquirers must comply with their KYC/AML obligations, which essentially means disclosing their entire corporate structure to their UBOs and individual controlling directors, etc. In today's world, it is difficult to use legal structures to disguise ownership, and even the most opaque corporate structure is just a letter from the regulator away from full transparency.
It's always best to keep things as simple as possible, both to make it easier to set up banking arrangements and to pass the acquirer’s due diligence tests, which is quite a bit tougher.
Something to consider here: there is a new set of Visa rules regarding merchant outlet location that go into effect on 15 October. In a nutshell, Visa is trying to crack down on merchants who are not actually based in Europe accessing its European card acquirer network by setting up a European company. The new rules stipulate that it is not enough for the merchant to have a European company; the 'merchant outlet location' must also be in Europe. What does this mean?
Generally speaking, it’s where the business is operated from: where the offices are located, decisions made, etc. It also refers to where the customers are. If the merchant is not physically located in Europe, then the expectation will be that a fair amount of its processing traffic comes from Europe.
There are a number of other requirements and conditions, but the overall idea is that merchants wanting to use acquiring services in Europe should have a bona fide European operation and/or European customers.