Getting a corporate bank account in Japan is more complex than you’d think
Imagine this: you’re on a fantastic first date. The chemistry’s there. You’re laughing so hard at each other’s jokes that your abs feel sore.
Time flies by and before you know it, it’s getting late. You say goodnight and let your eyes linger on each other as you separate. And you can’t wipe the grin off of your face on your way home as you get excited about seeing each other again.
But then…nothing happens. No texts…no calls…
You’ve been ghosted!
And the worst part? You don’t even know why.
(Haven’t experienced this? We’re impressed.)
Believe it or not, that’s exactly what it’s like to try and open a corporate bank account in Japan. There’s lots of wooing involved in establishing a relationship so that you can make it official. But no matter how well your introduction goes, you might get a no. And you won’t know why.
And you know what? This doesn’t just happen to foreigners in Japan. Japanese people never know if they’ll qualify for a bank account, either!
Getting ghosted hurts, and we don’t want you to experience that. So here are 10 facts you need to be aware of with bank accounts in Japan that can derail you:
First…do you even need a corporate bank account in Japan if you have a global banking partner?
Yes, you do. And here’s why:
1. Some payments can only be made via a Japanese bank account
When you’re running a business in Japan, there will be some basic payments you’ll need to make that can only be made or accepted from a Japanese bank account. These payments include certain payroll, tax-related payments, internet and phone service payments, and utilities.
These payments cannot be made by a global bank account, so you’ll need a local account to supplement your main account.
2. Some customers and vendors will only receive from or pay into a Japanese bank account
Many Japanese customers and companies are not prepared to handle international transactions. You’re bound to have some connections that have strict policies when it comes to banking and money transactions.
While you’ll need a local account to maintain the transactions we listed above, you only need to fund the local account on an as-needed basis. There’s a good chance you fall into the category of companies where having a global banking partner won’t make sense for cost and other reasons. So, you’ll absolutely need a local bank account for all your banking needs.
Now that you know why you absolutely need a company bank account in Japan, here’s your next obstacle: can you get one?
3. Banks have a strict Know Your Customer (KYC) process
Get ready to be interviewed. Most banks are selective of their customers due to anti-money laundering requirements. You’ll need to be prepared to answer a lot of questions about your business, and be aware of the possibility that you might be rejected.
Newly established companies are more likely to be rejected because they have lower credibility (especially foreign companies), which means you’re starting off at a disadvantage.
4. You’ll need to produce a lot more information and documents to pass screening
Since banks conduct stricter assessments for new companies, you’ll need to be prepared with documents. Documents can include things like your business plan or financial statements.
5. You’ll be expected to show up in person with a seal to open your account
Banks generally require the company’s representative director to visit the bank window with a seal to open a bank account. They like to put a face to a name and this is important in establishing a solid relationship.
6. It can take up to 6 months(!) to open a bank account in Japan
For starters, you can’t open a bank account in Japan until you’ve officially established your entity in Japan, so you have to wait for that process to be completed.
Then, after incorporation, it can take anywhere between 3 to 9 weeks to open a bank account. And then, another 2 to 4 weeks to set up internet banking.
The actual timeline to finish this process depends on the activities of your business, when your operations in Japan will begin, how famous your company is, where the headquarters are located and where funds sent from abroad will originate from.
For most companies, the time lag involved with opening an account can pose a challenge if employees need to be paid soon after establishment.
Now that you’ve got a company bank account in Japan, can you manage it?
You might assume that banking in Japan has got to be amazing; after all, it’s the land of the robots, right?
Well…no, banking in Japan is definitely more complicated than you’d think, especially when it comes to management and transactions.
7. Online banking interfaces in English aren’t effective and cost 6 times more
Online banking with English interfaces are hard to come by, and the ones offered by a limited number of banks in Japan are not robust. Plus, even if you have an online portal in English, you might not be able to complete forms without using the katakana alphabet. To make matters worse, bank fees for English interfaces can be six times higher than for Japanese interfaces.
8. You need someone physically located in Japan to make timely transactions
Japan has limited banking hours which can make it challenging to complete transactions on time from abroad. Let’s say a transaction needs to be approved. If approval by the set date is missed due to time zone differences, your payment will be rejected and you’ll need to start the process over again.
Also, you might need to physically go to the bank with your passbook and seal depending on the transaction, so you’ll need someone on the ground to make this happen.
9. You need a Japanese speaker to help you with applications and transactions
There are several reasons why you need a Japanese speaker to help you:
-You need to fill out an application in Japanese to set up your online banking service.
-Banks call a lot. And fax(!). Some banks require a Japanese speaker to be the point of contact when it comes to discussing anything related to your account.
-To make a bank transfer in Japan, you have to have knowledge of Japanese kanji and katakana in order to confirm that your transfer is going to the correct person. Since kanji can be read in different ways, this is a challenge even for Japanese people (but they know how to research the pronunciation).
10. You’ll need to safeguard your bank seal with someone you trust in Japan.
Part of the application process for opening a bank account at most Japanese banks is to produce and register a seal. You’ll need to keep this seal with someone in Japan so that they can physically go to the bank for some transactions.
Need a bank account, but worried about approval and management? Here’s how we solve these issues for you:
At weConnect, we have great relationships with the major Japanese banks which enable us to facilitate introductions and open accounts for our clients on their behalf (without them having to visit the bank in person). And until your own bank account is established, we can provide access to the weConnect trust account to pay salaries, insurance premiums, and taxes when needed.
Once we’ve finished opening your bank account, we can set up a cloud-based application to allow anyone from your company in Japan or abroad to view your Japanese bank statement online in English. The application links to your company’s Japanese bank account and pulls data from the bank in real-time. Plus, we’ll safeguard your bank seal in case a transaction needs to be made in person.
Since we have Japanese employees, we can prepare your transactions in Japanese (we’d have limited access that would enable us to do preparations, and then you can approve and release payments with your authority, at a click of a button).
Setting up and managing a bank account in Japan is riddled with surprises and challenges, even if it might seem like a straight-forward process. weConnect can help you avoid all of these issues – contact us here to discuss more about how we can help.