Last reviewed October 7, 2026 · By the NYBACS advisory team
Short answer
Banks ask for proof of business activity because federal due diligence rules require them to understand the nature and purpose of every customer relationship and then monitor whether the account is used that way. For a newly formed, foreign-owned company with no US track record, a working website, contracts, invoices and a clear account of expected payments are how a bank tells a genuine operating business from a shell company.
Key takeaways
- Understanding the nature and purpose of the customer relationship is a required element of every US bank's customer due diligence program.
- FinCEN has warned financial institutions since 2006 that anonymous shell companies can be misused to move funds, which is why new companies with no visible activity get extra scrutiny.
- Third-party evidence such as signed contracts and paid invoices carries more weight than descriptions written by the founder.
- The expected-activity figures you give at onboarding become the benchmark for later monitoring.
- A company that has not launched can rely on its business plan, pipeline and parent-group operations instead of trading history.
The regulatory reason behind the request
Under FinCEN's customer due diligence rule, a bank's anti-money-laundering program must include risk-based procedures to understand the nature and purpose of customer relationships, so it can build a customer risk profile and monitor for suspicious transactions. Proof of business activity is how that requirement is met in practice.
Foreign-owned US companies attract particular attention because of a long-recognized risk. In 2006 FinCEN issued guidance on the money-laundering risks of shell companies, noting that most are formed for legitimate reasons but that the ease of forming US entities with little disclosure has made some attractive for moving funds. A new LLC with a foreign owner, no website and no customers looks, on paper, similar to the risky pattern. Activity evidence lets the bank distinguish the two.
Which evidence carries weight
Not all proof is equal. Institutions give more weight to evidence they can verify independently:
| Evidence | Strong when | Weak when |
|---|---|---|
| Website | Live, describes real products and prices, uses a matching email domain | Template text, no contact details, registered last week |
| Customer contracts | Signed, with named counterparties and commercial terms | Unsigned drafts or generic agreements |
| Invoices | Matched to payments received or due | Issued to related parties only, or with no payment trail |
| Supplier agreements and purchase orders | Show the supply chain behind what you sell | Missing for a product business |
| Parent-company operations | Recent financial statements and a clear link to the US plan | A parent that is itself newly formed |
| Marketplace or app-store listings | Active storefront with sales history | Empty or suspended accounts |
| Licenses and registrations | Required licenses held for regulated activity | Activity that needs a license the company lacks |
Two or three strong items usually do more than a long list of weak ones.
Describing the activity you expect
Banks also ask what the account will be used for. Answer with specifics:
- Expected monthly incoming and outgoing amounts, as a realistic range.
- Typical transaction size — many small card payments behave very differently from a few large wires.
- Counterparties and countries — who pays you, whom you pay, and where they are located.
- Payment methods — domestic transfers, international wires, card processing, checks or cash.
- Why a US company and US account — US customers, US suppliers, investor requirements or a group expansion plan.
Accuracy matters more than size. A modest, accurate profile is safer than an inflated one, and far safer than understating activity to seem low risk: if the account later receives large wires from countries you did not mention, monitoring systems will flag them.
If the business has not launched yet
Many founders open accounts before the first sale. In that case, substitute forward-looking and background evidence:
- A concise business plan describing the market, the offer and the first 12 months.
- Letters of intent, pilot agreements or a documented sales pipeline.
- Evidence of the founder's or parent group's existing business, such as a home-country company profile and financial statements.
- A pitch deck or investor documents, if the company has raised or is raising capital.
- Proof of the initial funding and where it came from.
State plainly that the company is pre-revenue. Presenting projections as if they were results damages credibility when the bank checks.
Activity proof continues after the account opens
Proof of activity is not a one-time hurdle. Ongoing monitoring means a bank may later ask for the invoice behind a specific wire, a contract with a new major customer or an explanation for payments to a new country. Requests are more likely when activity changes sharply from the original profile.
The practical response is to keep a simple evidence file: contracts, invoices and correspondence organized by counterparty, matched to bank transactions in your books. When the business model changes — a new product line, new markets, a switch from services to goods — tell the bank proactively rather than letting its monitoring discover it.
Common mistakes to avoid
- Applying with a placeholder website and a personal email address.
- Offering only invoices issued to the founder's own home-country company as proof of trading.
- Understating expected international activity to appear lower risk, then receiving flagged wires.
- Presenting projections or letters of intent as if they were signed revenue.
- Starting a new type of business through the account without telling the bank.
- Being unable to produce the invoice or contract behind a large receipt when the bank asks.
NYBACS 360° support
How NYBACS helps
- Reviews your website, contracts and invoices from a reviewer's point of view and identifies weak or missing evidence.
- Helps write a precise business description and expected-activity profile that matches how the account will really be used.
- Prepares a pre-revenue evidence pack built on your business plan, pipeline and parent-group operations.
- Sets up bookkeeping that links each significant transaction to its supporting documents for later bank queries.
Frequently Asked Questions
Is a website mandatory to open a US business account?
Not legally, but for most online, service and product businesses its absence raises questions. If the business genuinely does not need one, such as a holding company, explain its purpose and provide the documents that show it instead.
Can invoices to my own overseas company count as business activity?
They show intercompany activity, which is real, but on their own they do not show independent customers. Pair them with the intercompany agreement and evidence of the group's external business.
What if my expected activity changes after opening the account?
Tell the bank. A short update explaining a new market or product, with supporting documents, is far better than a sudden change that triggers a monitoring alert and a request for information.
Does a holding company need to prove business activity?
Yes, in its own terms. A holding company shows its purpose through its ownership of subsidiaries, investment documents and the source of funds it receives, rather than customer invoices.
