The banking industry in offshore jurisdictions has been virtually destroyed with FATCA. Nowadays it is gaining popularity again. We would like to provide you an overview of the best jurisdictions for obtaining an offshore banking license.
In 2012, the IRS in the US declared war on offshore banks, closing small banks and imposing huge fines on large banks that could pay.
Fines are still imposed on those who do not report on accounts with the US dollar.
The US Congress passed the FATCA, which requires all international banks that work with the US dollar to report on account holders in the USD every year. Essentially, this fact has turned offshore bankers into unpaid IRS agents.
The project was delayed with implementation for years, and no one had an understanding of how it would be implemented. This uncertainty made it almost impossible to obtain new licenses of offshore banks and practically did not guarantee the applicant to open a correspondent account.
No one was ready to attempt to open a new bank. All current banks were busy closing current problems with AML and Compliance and no one risked opening new projects.
In 2016, the IRS emerged victorious from this war, and almost every bank in the world has signed an agreement with FATCA. At the moment, new banks face additional requirements, however, as practice shows, all of them are doable.
Each of these jurisdictions specializes in different forms of banking licenses based on the target market.
Tips for choosing the best jurisdiction for obtaining an offshore bank license:
When choosing a jurisdiction, determine the amount of reserve capital. Some laws require from $ 500,000 to $ 3 million for a license of a controlled bank and from $ 1 million to $ 7 million standard capital for a small international bank. Jurisdictions like Panama and Luxembourg will require $ 30 million for a general license.
Andorra and Luxembourg issue licenses for large private banks.
The Cayman Islands prefers investment and controlled banks (the jurisdiction was recognized to be able to conduct transactions with the highest degree of reliability).
Vanuatu is a common jurisdiction for European parent companies.
The license of St. Kitts and Nevis and Dominica link the bank with the Eastern Caribbean region, which means that the bank operates within the regional central bank. Registering an offshore bank in Dominica takes only 1-2 months.
Belize may be considered the preferred jurisdiction for the establishment of a bank to make deposits, however, high capital requirements (500,000 USD) must be taken into account.
Many international banks are domiciled in Panama because of low wage requirements, labor costs, executive visas, world-class reputation.
The Gambia is one of the easiest and quickest procedures for obtaining licenses. Moreover, this jurisdiction is not included in the OECD and FATF white and white lists, which makes it imperceptible at the moment.
Even if you want to accept US loans, we can register a bank that is compliant with FATCA requirements.
At the moment – this is the optimal jurisdiction for the establishment of an offshore bank.
A bank with a controlled license, can carry out activities only by the person indicated in the license. Thus, each client / owner of the bank must be approved by the central bank.
Supervised banks usually register for large family-owned companies, groups of rich people or transnational corporations for lending to individuals around the world without tax liabilities. The controlled bank cannot provide services to a wide range of persons.
Such licenses are most often associated with the offshore industry. This type of license allows you to conduct all types of banking business with customers outside the country of issue of the license. For example, if you establish an international bank in Belize, you can offer services to anyone other than the residents of Belize.
General license allows you to conduct business with local and international clients. Of course, central banks want to protect their citizens in the first place, therefore, capital requirements and regulation of general banks as a whole are stricter than for international banks.
It often happens that companies apply for licenses and stand for a long time on AML and Compliance procedures. It often happens that after receiving a license, the company no longer needs the bank as such (loss of funding or change in the decision of the founders).
However, according to the procedure, each bank owner must be approved by the regulatory authority.That is, you can’t just buy a license and get started. The new group of owners must undergo an extensive review, submit a new business plan, and provide personal financial reports.
This process takes several months.
The presence of ready-made companies with banking licenses is specified at the request of the client.
The cost of obtaining a turnkey banking license for an International Bank license ranges from $ 175,000 to $ 650,000, depending on the jurisdiction, the quality of your business plan, and whether you have a license in another jurisdiction.
Our company provides assistance in preparing all the necessary procedures, drawing up a business plan, passing AML, KYC procedures, searching for employees to fulfill the requirements for obtaining licenses, and integrating bank systems into the company’s work system.
There are ready-made licenses for sale. Make a request.
Please contact our specialist to learn more about bank licenses and receive an individual offer.