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  Professional offshore incorporations and offshore banking services since 1996

Offshore Banks

Offshore Banking Licenses

Jurisdictions details.

Through an offshore bank, you may access the international marketplace for your capital raising endeavors. Rather than secure capital personally for your projects, you may do so in an institutional capacity through your own personal offshore bank and the deposits it receives. If you have a business currently in operation, your corporation can hold its assets in its own offshore bank to secure additional privacy, rather than have the funds held in an unrelated depository. This arrangement will also facilitate money movements between subsidiaries of your corporation.

It is possible that the operation of the private offshore bank could itself become a profit-center. Offshore banks may pursue investment activities from which on-shore banks are prohibited, such as underwriting. Additionally, you may utilize your offshore bank to provide captive insurance or real estate brokerage services.

Located in a jurisdiction outside your country, the activities which you conduct through your private bank will be more confidential and secure. You will be able to extend the same privacy to your clients, along with the other benefits you can offer, such as letters of credit to third parties. A final measure of security is that offshore banks in many jurisdictions offer confidentiality with respect to ownership.

From a tax perspective, bank profits are generally not taxable to the owners. Further, in some jurisdictions, there are treaties which make banking easier from a withholding tax perspective. Where there is a treaty in effect, there is little or no requirement of withholding.

Some people have awareness of the benefits of a private bank, but are intimidated because they feel that the required documentation could be cumbersome, or that there is greater risk associated with it. Compared with the stringent requirements of chartering an on-shore bank, it is not difficult to form and own an offshore bank.

We can establish a private bank for you for as little as US$25,000. If you feel that your offshore needs are complex enough to warrant the establishment of an offshore bank, then you should for additional information.

The following offshore jurisdictions have the facility to grant banking licences to qualified applicants. They offer some interesting possibilities because:

a) They will allow a bank to operate free of tax on profit and

b) It is possible to set up a bank without the need to maintain a physical presence within the jurisdiction other than that which can readily be provided by a service company.

Best Offshore jurisdiction to form a Bank:
offshore banks  SAINT VINCENT AND THE GRENADINES: Most of of our clients have preferred the banking laws of St. Vincent which is both recognized in global banking circles with international correspondents and it is a country that maintains a degree of flexibility that many bank owners prefer.
Confidentiality in relation to the incorporation and the conduct of business of an International Banking Licence has been preserved by the Confidential Relationships Preservation (International Finance) Act, 1996 and by the International Banks Act 1996. There are no exchange control restrictions applicable to offshore transactions, no stamp duties of any kind on any transactions, no corporation tax, no income tax, no withholding tax, no capital gains tax, no estate, inheritance, succession duties. St. Vincent enjoys the favor of political independence and stability, a skilled work force, duty free importation of equipment and fixtures for use in offshore banking business, excellent International Banking Laws and excellent telecommunications, trained Lawyers, Bankers, Accountants, low crime rate and finally a conducive natural environment. The following are the licenses which are issued under the International Banks Act 1996: A Class I Offshore Banking Licence entitles the Licencee to engage in offshore banking generally outside the country. A Class II Offshore Banking Licence entitles the Licencee to engage in offshore banking with persons named, or groups specifically described in a written undertaking. Requisites: Local domestic company or an International Business Company must be incorporated under the laws of the State of Saint Vincent and the Grenadines; The prescribed minimum capital requirement for a class 1 licence is US$500,000 and for a class 2 licence is US$100,000; There must be at least two directors, one of whom must be a resident. The directors are required to be natural persons; A principal office and place of business in the State; A registered agent who must be resident within the state and who must not be the resident director; A class 1 licence applicant must deposit US$100,000 cash or purchase Government or securities of equal value; A class 2 licence applicant must deposit US$50,000 cash or purchase government bonds or securities of equal value; Application fees are US$1,000 for Class 1 licence and US$750 for Class 2 licence; Narrative description of principal's experience in banking business and character references together with other such particulars as may be prescribed; Indemnity insurance coverage may be required based upon the nature and type of the business to be carried on by the licencee. Fees: Payable on the grant of: (i) Class I Licence - US$10,000 / (ii) Class II Licence - US$7,500. Annual Licence Fees: (i) Class I Licence - US$3,000 / (ii) Class II Licence - US$2,500

offshore banks  ANGUILLA: Anguilla is a small British colony located at the northernmost end of the Leeward Islands in the Caribbean. It has a very stable government. Its annual licensing fee is US$3,800 for banks maintaining a "physical presence" on the island (i.e., a local office and resident agent), and US$7,600 for banks with no physical presence. Fees are assessed on a calendar-year basis and advance payment of first year fees is required. The infrastructure is good here, communication systems are excellent (calls can be direct dialed from the U.S.), the mail system is good and the island is a pleasant, if somewhat quiet vacation spot. An international airport with direct U.S. connections is located on the neighboring isle of St. Marteen, and there are several flights a day between St. Marteen and Anguilla, as well as a ferry service. If greater ease of access is important to the bank's operations, Anguilla-based banks may be managed from Montreal, Hong Kong, or Zurich. Anguilla is considered comparable in every respect to leading offshore banking centers and the Anguillan government is still granting charters, which makes it our number one choice for a Caribbean-based international bank at this time. Government of Anguilla's policy with respect to bank licensing is as
follows:
a) full banking activities will only be permitted by branches or subsidiaries of banks with a well established and proven track record and which are subject to effective consolidated supervision by their home supervisory authority.
b) off-shore banking will only be permitted by:
(i) branches or subsidiaries of banks with a well established and proven track record which are subject to effective consolidated supervision;
(ii)banks which, although not subsidiaries, are closely associated with an overseas bank, and which, by agreement, will be included within the consolidated supervision exercised by the overseas bank's home supervisory authority;
(iii) wholly-owned subsidiaries of certain acceptable non-bank corporations whose shares are quoted on a recognised stock exchange, where the objective of the subsidiary is to undertake in-house treasury operations only, and where the operations are fully consolidated within the published financial
statements of the parent company.
Banks will only be granted licences if their place of incorporation, mind and management are within the same jurisdiction, or, in the case of a subsidiary, if the mind and management are located in the jurisdiction in which consolidated supervision is being exercised.
In line with internationally accepted good practice in relation to bank licence applications, the Licensing Authority should expect as a minimum to be satisfied that:
a) the management has proven experience in a relevant field of banking
b) the controllers are fit and proper people to undertake the functions envisaged and that the ongoing management will be competent;
c) the institution will conduct its business in a prudent fashion;
d) the institution has devised an appropriate and sustainable business plan;
e) adequate capital and other resources will be provided in relation to that business plan;
f) direct confirmation has been received from the supervisory authority in the country in which the institution or its proposed parent is incorporated, that the authority;
(i) consents to the establishment of the institution in the host territory;
(ii) will exercise consolidated supervision over the institution's overall activities, including within the host territory; and
(iii) will cooperate in the sharing of regulatory information with the Licensing Authority.
g) the applicant will appoint approved auditors who will perform that work according to internationally accepted auditing standards.
h) the applicant will disclose to the Licensing Authority all information that the latter legitimately needs to fulfil its overall supervisory responsibilities.
A prerequisite for the maintenance of sound banking standards is careful consideration of the financial standing, overall probity, skills and reputation of new banking applicants. To this end in addition to obtaining the formal consent referred to above, Government of Anguilla will consult parent supervisory authorities about these aspects in relation to each new applicant seeking to establish a bank in the territory. This consultation is an essential part of the Anguillian Government's duty to cooperate with other supervisory bodies.

offshore banks  ANTIGUA: Antigua is an independent Caribbean Island which is currently welcoming applications for a banking licence which would be unrestricted (expect from a prohibition on doing business with residents of the Caricom area) There is a requirement to have a paid in capital of US$ 1 million but no requirements regarding capital reserves or loan ratios are imposed and no physical presence on the island is needed which cannot be provided by a management company. Antigua therefore represents a real possibility to obtain an unrestricted licence without the considerable costs which would be experienced in most other competitive jurisdictions. The capital requirement is higher than that which is experienced in some of the Pacific rim Islands but Antigua is one of the few places where an unrestricted licence is available with relative ease. We estimate the costs of obtaining a licence would be approximately US$ 45,000 which would include our services in providing the necessary local director and management services which are required.

offshore banks  BAHAMAS: The Bahamas is situated in the Caribbean and is considered one of the most beautiful international banking centers in the world. It has a fully independent government. Communications systems are considered excellent and there are frequent air and sea connections with the U.S. There are no taxes on international banking income. Experts consider the quality of its banking regulation to be excellent and it has a comprehensive banking secrecy law. However, US$1 million dollars in paid-in capital is required in order to obtain and operate an unrestricted licenced international bank there. This type of licence can be obtained by private individuals but only if they are able to show that they have substantial high net worth. Restricted licences are more readily granted to financial institutions. A restricted licence enables the holder to provide banking and/or trust services only to a specified class of associated individuals or companies who would normally be named in the licence or in a schedule attached to the licence. The minimum paid up capital is only US$100,000. Fees for obtaining a restricted licence would be in the order of US$30,000. Both type of banks must maintain reserves in cash, or near cash, equal to 20-25% of deposits. The government's attitude toward international banks owned by non-bankers is considered fairly good, but the Bahamas would probably be a poor choice because of the the stringent capital requirements.

offshore banks  CAYMAN ISLANDS: Like Anguilla, the Caymans are a British colony. This assures bank owners that they will receive a measure of political stability. The annual license fee is US$9,000. The quality of the Cayman Islands' banking regulations is considered by experts to be the best in the world, though there has been some erosion of support for the banking laws recently due to several frauds and bad publicity resulting from association with insider-trading and money-laundering cases, There has also been increasing pressure from the U.S. for an information-sharing agreement. The international banking infrastructure there is considered excellent, with ample facilities, and there are no taxes on international banking income. In spite of this, however, the Caymans have managed to retain very stringent banking secrecy laws, A major drawback is the paid-in capital requirement of US$500,000 in cash. Communications and postal systems are excellent. It is considered a desirable vacation spot, and air connections from the Cayman Islands to the U.S. are direct. However, the government's attitude toward private international banks owned by non-bankers is poor. Thus, though the Cayman Islands rate highly in comparison to most other centers, they would probably be a poor choice because of the poor attitude toward international banks owned by non-bankers.

offshore banks  COOK ISLANDS: The Cook Islands are located in the South Pacific off the shores of Tahiti. They are an independent nation in free association with New Zealand, but are self-governing both internally and externally. The annual license fee for international banks is US$1,000. The quality of the banking regulations is considered excellent. The paid-in capital requirement is US$500,000, US$10,000 of which must actually be paid in cash. Communications systems such as telephone, telex and mail are excellent. The attitude toward international banking is excellent, but the government's attitude toward international banks owned by non-bankers is poor. Because of this and the high capital requirement, it is currently rated a poor choice as a locale for private international banks. It does, however, offer an attractive alternative. Under Cook Islands legislation passed in 1982, it is possible to set up an International Investment Bank -- which can perform most of the investment and business functions of a regular bank, but which cannot accept deposits. As a result of this distinction, there is no paid-in capital requirement. In addition, the government's annual license fee for such an investment bank is much lower than the annual license fee for regular private international banks.

offshore banks  GIBRALTAR: Gibraltar is a full member of the European Union so similar requirements are imposed on banks incorporated in Gibraltar as those imposed  for UK banks. However, Gibraltar has certain distinct advantages: Banks can obtain exempt status and therefore operate completely free of tax; The costs of office space and staff are considerably lower in Gibraltar; There are currently no banking applications pending in Gibraltar so the time-scale between the application for and granting of a banking licence can be considerably reduced; Note that the majority of the costs would be incurred in having to employ two executive directors/managers with the requisite experience and in installing the computers and systems which are appropriate for a banking institution. Our fees for processing a banking application in Gibraltar would be from around US$ 60,000 with further fees being payable on success.

offshore banks  NAURU: The Republic of Nauru (pronounced Naa-rue) is a former Australian territory. It became fully independent in 1968. There is little risk of political instability because of its constitutional government and the lack of an adversary political party. The annual license fee is just US$1,500, plus a US$500 local agent's fee, making it one of the lowest in the world. The banking legislation was written by an attorney who specializes in tax havens. This makes the banking legislation expertly suited for private international banking. The paid-up capital requirement is one million Australian dollars -- or about US$730,000 at the conversion rate when this was written. However, this may be reduced or eliminated subject to negotiation with the licensing authority. Nauru has excellent telex and fair telephone service to the rest of the world, but travel arrangements are difficult. However, if the Nauru bank is managed from a location such as Zurich, this problem can be avoided. It is a relatively undesirable vacation spot. Again, this is not a problem if the bank is managed elsewhere, since one would never have to travel to Nauru. Nauru has no taxes on all types of income. There is minimal red tape to acquire a banking license, provided the minimum capital requirement can be satisfied. Finally, Nauru has a good international banking infrastructure, an excellent bank secrecy law and the government welcomes banks owned by non-bankers. Given these factors, Nauru is currently our top choice for a non-banker looking to establish an offshore banking operation in the Pacific region.

offshore banks  NETHERLANDS ANTILLES: The Netherlands Antilles are a Dutch colony or possession. There is no particular license fee for an international bank established there. The quality of the international banking regulations is considered good; however, US$500,000 is required as paid-in capital, The communications systems are excellent. It is a very desirable vacation spot, with several direct flights from the Netherlands Antilles to the United States. The international banking infrastructure is good, with enough attorneys and accounting firms to handle international business. A small amount of tax is imposed on international banking income, and some of the appeal of the Antilles was diminished when its tax treaty with the United States was canceled in January of 1988. The government's attitude is also poor toward international bank ownership by non-bankers. The Netherlands Antilles does have a good international banking secrecy law.

offshore banks  SAMOA: In our opinion Samoa is one of the better offshore jurisdictions which currently offer restricted offshore banking licences. Unrestricted licences are not obtainable by anybody other than existing banks and require a minimum paid up capital of US$10 million. This will probably be unattractive to most applicants. Restricted licences require a minimum paid up capital of US$250,000 but the operations of the bank must be run through a local trust company such as ourselves. This does mean that an element of third party control and involvement in the affairs of the bank is required but this has the advantage that local expertise is readily available. Costs for a restricted licence would be US$25,000 and application time would be approximately one to three months.

offshore banks  TURKS AND CAICOS: The Turks and Caicos Islands are a British colony located in the Eastern Caribbean, near the Bahamas. The annual license fee is US$7,500, and US$500,000 is required as paid-in capital. The quality of banking regulation is considered fair, as are the communications systems. As a vacation spot, it rates high, with direct flights available from Miami. The lack of accounting facilities makes the banking infrastructure a poor one. There is no income tax imposed on international banks, but the government's attitude toward private international banks owned by non-bankers is considered only fair, At present, there is a limited international banking secrecy law. In comparison to other centers, the Turks and Caicos Islands would appear to be one of the less desirable selections.

offshore banks  VANUATU: Vanuatu is an independent country in the South Pacific. Because of its unique status and publicly stated attitude, it once posed less concern over political stability than other, similar independent countries, However, there has been a growing amount of conflict among different ethnic groups in recent years and the prospect of political unrest has risen sharply. There has also been an increase in Western concern over reported ties between some factions of the Vanuatu government and the Soviet Union and Libya. On the financial front, Vanuatu remains among the most liberal of the havens with a paid-in capital requirement of only US$150,000 and an annual licence fee of US$3,000. The quality of its banking regulation, enacted in 1970, is excellent. Communications systems are excellent, and Vanuatu is considered a superb vacation spot. There are two connections for travel to and from Vanuatu. The business infrastructure is considered excellent, No taxes are imposed on international banking income but the government attitude toward international banks owned by non-bankers is considered just fair. Vanuatu does have an adequate international banking secrecy law. Despite these outstanding features, on a comparative basis, the current political uncertainty would appear to diminish Vanuatu's appeal as a base for your private international bank.

Some things you can do with your own offshore bank:

  • Set up your own banking instruments (e.g. bonds, securities &c).
    These can be used in a variety of ways not to be covered in depth here due to space limitations. You may issue letters of credit for yourself, certificates of deposit, provided funds are indeed there (don't do it otherwise, as this would qualify for fraud in most jurisdictions!), letters of recommendation, etc.

  • Boost your corporate image by retaining your very own bank.
    This can facilitate business no end: whether you are involved in import-export trade, in industrial manufacturing, in upmarket financial services, or simply want to impress your business associates and gain a cutting edge against your competitors – an offshore bank is probably the most powerful business tool money can buy.

  • Grant yourself constructive credit ratings.
    Fed up with hopping around, currying favor with loan sharks and paying exorbitant sums to “credit repair” agencies that can't really do a thing for you anyway, except sing sweet, harmless odes to deaf ears? Why not do it the banks' way instead? With your own offshore bank, it's a totally new world to explore – grant yourself the credit rating you deserve and make good use of it in your other financial operations.

  • Grant your own loans and mortgages.
    A nice way of legally funneling profits offshore and minimizing on taxes! Once you sign up, we will show you a unique insider strategy how to reduce your taxload and even say goodbye to taxes forever.

  • Seize your own assets before your creditors do.
    Don't twiddle thumbs while the vultures are blithely hacking away at your life's work: with our insider strategy, you will be able to employ your bank to lay its hands (i.e. yours!) on your assets before anyone else does. Buy out your own debt for a song, stage your own “friendly self-takeover” and make exorbitant profits – absolutely legally, too, provided you know the proper way to do it!

SUMMARY

In summary, our recommendations are: For a restricted licence - St. Vincent, Samoa or Nauru. For an unrestricted licence - Antigua if cost is an issue, Gibraltar if cost is unimportant. Irrespective of the jurisdiction in which clients decide to proceed it will be necessary for them to produce:

1. References from a leading bank, leading firm of lawyers and leading firm of accountants on each shareholder and each director.

2. Police clearances.

3. Evidence to satisfy the authorities that the shareholders/promoter(s) of the bank have substantial wealth and assets.

4. A detailed business plan which outlines the type of business that the bank will undertake, the way in which that business will be handled by the bank and estimates of turnover for the first 3 years. This is perhaps the most important document.

5. Evidence that the required minimum capital is available.

6. Curriculum Vitaes on all directors and shareholders which should show some expertise in running a financial institution/bank. This is the minimum required documentation. The list is not necessarily exhaustive. As can be seen, some authorities will require that local directors be employed who are actually going to run the bank. In all jurisdictions it is always helpful if a local director who has banking expertise attaches his name to the application especially if the other directors are unable to show any relevant experience. We can provide such directors upon request.

Ultimately the choice of jurisdiction will depend largely on what business you wish to undertake in the name of the bank and whether or not you wish to set up a physical presence in the jurisdiction of incorporation.

We trust that the above is helpful but we would be pleased to provide whatever further information you may require.

 

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Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any errors or omissions.


Please go to our Uses of offshore Companies Page where you will find interesting information on the benefits of using offshore companies and trusts for business and personal use, links to information on other locations and details of our products and services.

 

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