The most useful time to discover a banking problem is before the company is incorporated, the licence application is funded, staff are hired and the founder is committed to one operating model.
That is the purpose of a bankability pre-mortem.
It does not ask a bank to guarantee an account in advance.
It asks:
If a serious onboarding team reviewed the planned business tomorrow, which parts of the ownership, activity, geography, customers, counterparties, flows, source of funds, source of wealth and evidence would be easy to explain — and which would still depend on hope?
The answer can change the structure before sunk costs make change expensive.
Three key takeaways
- Run the banking failure scenario before spending. Assume onboarding is difficult and identify which facts or documents would cause the problem.
- Test the planned business, not only the legal entity. A clean certificate of incorporation or future licence does not explain customers, payment corridors, counterparties or expected transaction patterns.
- A pre-mortem reduces avoidable risk but never creates pre-approval. Bank policies, risk appetite and market conditions can still change.
This article starts before regulatory approval
A separate question asks why a regulator and a bank can reach different conclusions.
The pre-mortem starts earlier.
Before choosing the final jurisdiction or licence route, map the business as if a bank were already asking the difficult questions.
That changes the sequence from:
incorporate → licence → spend → apply to banks → discover the problem
to:
activity → ownership/control → regulation → geography → customers → flows → evidence → likely banking fit → structure → spend
The pre-mortem does not replace licensing analysis.
It prevents banking from becoming a late-stage surprise.
The first test: ownership and control
Draw the proposed ownership chain before forming it.
Then ask:
- Who are the natural persons at the end of the chain?
- Who controls the company in practice?
- Why does each holding or intermediary entity exist?
- Can the ownership be evidenced cleanly?
- Does any nominee, trust, shareholder agreement or other arrangement make control more complicated than the diagram suggests?
A structure that needs a ten-minute explanation is not automatically bad.
A structure for which the explanation changes depending on the audience is a warning sign.
The second test: activity
Describe the business in three accurate sentences.
What does it sell?
Who buys it?
How is the product or service delivered?
If the description depends on vague words such as “consulting”, “technology”, “trading” or “investment” without explaining the underlying commercial activity, onboarding is likely to become harder.
The bank needs to understand the customer profile and expected use of the account.
A regulator may also care about the activity, but the questions are not identical.
The third test: geography
Map the countries connected to the business.
At minimum:
owner residence → company jurisdiction → staff → customers → suppliers → regulated markets → bank → payment destinations
Then ask why each country appears.
A global business can legitimately have many jurisdictions.
The problem is not internationality.
The problem is unexplained internationality.
The fourth test: customers and counterparties
Who will pay the company?
Who will the company pay?
Will revenue come from many ordinary customers or a few high-value counterparties?
Are there marketplaces, payment processors, exchanges, brokers or other intermediaries?
Does the company expect business from sectors or locations that banks commonly subject to greater analysis?
The aim is not to predict a universal risk score.
It is to ensure that the commercial model is concrete enough to assess.
The fifth test: expected flows
Create a one-page transaction model.
Record expected:
- monthly inflows;
- typical payment size;
- largest anticipated payments;
- main currencies;
- main sending countries;
- main outgoing categories;
- shareholder funding;
- intercompany payments; and
- distributions to owners.
The numbers will change.
What matters is that the bank application is based on a real operating forecast rather than a generic statement such as “international payments.”
The sixth test: regulatory status
Identify whether the activity needs a licence and what that licence would actually cover.
Then do not stop.
A licence can strengthen the compliance package. It may prove that governance, controls or capital have been reviewed under the relevant regime.
It does not answer every banking question about flows, counterparties or the institution’s own risk appetite.
The pre-mortem therefore asks whether the banking case still works after assuming the licence is granted.
That is how this analysis avoids confusing licensing with bankability.
The seventh test: source of funds
How will the company be funded at launch?
If the founder contributes capital or lends money, can the economic origin of those funds be demonstrated?
If a strategic investor funds the company, can that relationship and payment path be evidenced?
Source of funds is about specific money.
It is not solved by saying “the funds come from my other bank.”
The eighth test: source of wealth
For a relationship that requires a broader wealth analysis, can the owners explain how they accumulated their wealth?
This is a separate question from the startup transfer.
A founder may have a clear source of funds for a $100,000 capital injection and still need to explain the wider source of wealth supporting the relationship.
Do not merge the two files.
The ninth test: documentary readiness
Now list the evidence that would support the story:
- ownership records;
- identity and residence documents;
- business plan;
- contracts or pipeline evidence where available;
- licence or application status;
- source-of-funds evidence;
- source-of-wealth evidence where relevant;
- expected flow model; and
- corporate documents.
The goal is not to fabricate evidence for a future business.
Forecasts should be labelled as forecasts.
Proposed customers are not existing customers.
A pending licence is not an issued licence.
That separation between fact and scenario is essential.
The strongest objection: no pre-mortem can know what a bank will do
Correct.
A bankability pre-mortem is not a bank decision.
FATF promotes a risk-based approach, but individual institutions still operate under their own legal obligations, products, policies, correspondent relationships and commercial appetite.
A bank can also change its policies between planning and onboarding.
So the pre-mortem has a limited objective:
remove avoidable ambiguity and structural contradictions before the business becomes expensive to change.
It improves preparedness.
It does not sell certainty.
The failure table
Before approving the structure internally, write down the five most plausible banking failure modes.
For each one, record:
| Failure mode | Evidence or design response |
|---|---|
| Ownership is too difficult to understand | Simplify where commercially possible; document control clearly |
| Business activity is vague | Use a precise business model and real contractual evidence |
| Geography does not match the story | Explain the commercial reason for every material jurisdiction |
| Funding cannot be evidenced | Build SOF/SOW files before transfer |
| Expected flows do not fit the proposed account | Reassess bank/product fit or operating model |
If the response is merely “we will explain later”, the pre-mortem has found unfinished design work.
What this changes in international structuring
International founders often think of banking as execution.
It is partly architecture.
The full chain is:
person → immigration → domestic residence → treaty → activity → entity → management/PE → ownership/control → banking → maintenance
The banking pre-mortem reaches back into almost every earlier layer.
Residence affects where the owner lives and manages.
Activity determines who pays and why.
Entity choice determines the legal customer.
Management and ownership determine who controls it.
Funding determines source-of-funds evidence.
Maintenance determines whether the bank profile can remain current.
That is why the useful question comes before incorporation:
If the bank says no later, what would we wish we had tested today?
Sources
- FATF — The FATF Recommendations
- FATF — Guidance for a Risk-Based Approach: Banking Sector
- FATF — Risk-based approach and de-risking
- AUSTRAC — Initial customer due diligence
- AUSTRAC — Source of funds and source of wealth
Disclaimer
This article provides a general planning framework and does not constitute legal, tax, licensing or banking advice. A bankability pre-mortem cannot predict or guarantee the decision of any financial institution. Banking, licensing and regulatory requirements vary by jurisdiction, activity and institution and should be verified against the actual planned business.
