The offshore banking industry was almost destroyed by FATCA, but now it is gaining popularity again. This is an overview of the most promising jurisdictions for obtaining an offshore banking license for now.
The activities of offshore banks were very low from 2012 to 2015. Fortunately, international banking is making a comeback today.
The IRS in the United States has declared war on offshore banks since 2012, shutting down small ones and imposing huge fines on large institutions that could pay.
Fines are still imposed on those who do not report on their US dollar accounts.
As we all know, the US Congress has passed the Foreign Account and Tax Compliance Act (FATCA), which requires all international banks dealing with the US dollar to report on dollar account holders every year. In fact, this legal act has turned offshore bankers into unpaid IRS agents.
The project was delayed for years, and no one knew how it would be implemented. This uncertainty made it almost impossible to obtain new offshore banking licenses and in fact, did not guarantee an applicant a correspondent account opening.
Nobody was ready to try to open a new bank. All current banks were busy with closing the current AML and Compliance issues, and no one risked opening a new project.
In 2016, the IRC won this war, and almost every bank in the world has signed an agreement with FATCA. At the moment, new banks are faced with additional requirements; however, as practice shows, all of them are feasible.
Each of these jurisdictions specializes in different forms of banking licenses based on the target market.
Here are several tips for choosing the best jurisdiction for an offshore bank license:
When choosing a jurisdiction, decide on the size of the reserve capital. Some legislative acts require from 500,000 to 3,000,000 USD for a license of a controlled bank and a standard capital from 1,000,000 to 7,000,000 USD for a small international bank. Such jurisdictions as Panama and Luxembourg require 30,000,000 USD for a general license.
Andorra and Luxembourg issue licenses for large private banks.
The Cayman Islands are preferred for investment and controlled banks (the jurisdiction is considered capable of conducting transactions of the highest reliability).
Vanuatu is a common jurisdiction for European parent companies.
The Saint Kitts and Nevis and Dominica licenses connect a bank with the Eastern Caribbean region, which means that a bank operates within a regional central bank. The registration of an offshore bank in Dominica takes only 1-2 months.
Belize can be considered the preferred jurisdiction for the founding of a bank for deposits; however, it is necessary to take into account the high requirements for the authorized capital (500,000 USD).
Many international banks are domiciled in Panama due to low wage requirements, labor costs, executive visas, and a world-class reputation.
The Gambia is the country with the easiest and fastest licensing procedures. Moreover, this jurisdiction is neither in the OECD nor in FATF black and white lists, which makes it invisible at the moment.
Even if you want to accept payments from the US, we can register a FATCA compliant bank.
At the moment, this is the best jurisdiction for the founding of an offshore bank.
A bank with a controlled license can operate only with the person specified in the license. Thus, each client/bank owner must be approved by the central bank.
Controlled banks are usually registered for large family businesses, groups of wealthy individuals, or multinational corporations to lend individuals around the world without tax liability. 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 clients outside the country where this license was issued. For example, if you are establishing an international bank in Belize, you can offer services to anyone who is not a resident of Belize.
The general license allows you to conduct business with local and international clients. Surely, central banks want to protect their citizens first of all, so the capital requirements and regulation in general for general banks are more stringent than that of international banks.
It often happens that companies submit documents for obtaining licenses and pass AML and Compliance procedures for a very long time. It often happens that having received a license, a company no longer needs a bank (loss of funding, or a change in the decision of the founders).
However, according to the procedure, each bank owner must be approved by the regulatory body. That is, you cannot just buy a license and get started. The new group of owners must go through extensive due diligence, submit a new business plan, and submit personal financial statements.
This process takes several months.
The availability 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 USD to 650,000 USD, depending on the jurisdiction, the type of your business plan, and the availability of a license in another jurisdiction.
Our company will assist in preparing all the necessary procedures, drawing up a business plan, going through AML, and KYC procedures, finding employees to fulfill the requirements for obtaining licenses, integrating bank systems into the company’s work system.
Please contact us to learn more about licensing options, receive an individual offer based on your requirements, and a detailed calculation for obtaining a license for your future or existing business.