Now you can get your license in Vanuatu. Know more
Banking offshore: Bank license
The bank sector and banks were always perceived by the public, as well as by the business world, as a symbol of wealth and economic power. The same applies also in the case of offshore banks, which can be advantageously formed in a number of leading as well as new offshore jurisdictions and financial centres.
In most jurisdictions it is almost impossible for a new applicant, who wants to run banking services, to establish a bank company, unless the applicant is a renowned and respected international bank incorporation.
The authorities protecting the tax sector from adverse impacts (often even in a nonsense and panic manner), which could put in doubts the stability of the bank sector of the country in questions or its goodwill, have thought out a number of bureaucratic and financial barriers which lead serious but less capital-secured applicants to exclusion from possibilities of applying for a bank licence.
A number of countries require the registered capital of a bank to amount to hundreds of millions of dollars, which must often be fully paid up still before the issuing of the license or they concentrate their attention only to those entities who already have a bank license in another country.
But still many entities, especially international holdings, are interested in getting a bank license for the providing of bank services for the needs of their holding. The bank license which is referred to as "internal" in many jurisdictions can be obtained in a standard manner in many offshore locations at surprisingly advantageous prices and under favourable conditions.
Full or partially limited general or international bank license is more demanding in terms of requirements imposed on the registered capital amount, nevertheless there are locations where it is possible to get even this type of license under acceptable conditions.
Basic types of offshore bank licenses
In general terms it is possible to divide offshore bank licenses into two basic types of licenses which can have a number of further subtypes.
General bank license is understood in a majority of jurisdictions as a license for the providing of bank services at the place of registration or international bank services for the public. The bank acts as any other bank entity, it can accept deposits from the public and perform common bank services with residents or non-residents. In an overwhelming majority of countries, however, the activity is limited to providing services to non-residents, i.e. offshore banking services only. This type of offshore bank is established in view of providing commercial bank services in an offshore regime.
Restrictive bank license (often referred to as the "internal" license) is a license which limits territorial activities of the bank, possibility of providing services in foreign currencies or to certain persons. In a majority of cases, the bank cannot accept deposits from the public and it can provide its services only to those entities which are provided for in the bank license. This bank is used as the so-called corporate bank for active Cash Flow management.
The offshore bank company established that way can become a high-quality tool for:
- Tax planning
- Increase in image of the financial group or holding
- Active cash flow management
- Issuing bonds and guarantees for tender proceeding purposes
- Easier access to bank information about business partners and competitors
- Easier access to financial markets
- More progressive financing of business activities of a holding or financial group
- Establishment of confidential and flexible bank accounts
- Providing loans and credit facilities
Most offshore banks are not subject to taxation, withholding taxes, stamp duties, fees and taxes for cheques issued or accepted or to other forms of direct and indirect taxes. This brings an entirely new concept of banking services for the client, which has been known for several years as Offshore Banking or INTERNATIONAL PRIVATE BANKING. Another significant factor of the offshore banking services is formed by strict anonymity and confidentiality, which is welcomed by many investors and depositors having a bank account opened in the name of a natural person or legal entity, which is often an offshore company as well. These offshore banks are also fully respected entities in a wide bank international community, which is also declared by the fact that a vast majority of international banks are domiciled in one of the tax heavens, such as Bahamas, Cayman Islands, Jersey, Guernsey, Labuan, Isle of Man or Hong Kong.
Leading bank centres with very low or no taxes and a highly liberal environment are concentrated in a significant extent into three geographic areas-Caribbean, Europe and Pacific.
The truth is that the laws of these different foreign jurisdictions differ very much and that one jurisdiction may be at a certain moment far more attractive than another jurisdiction, and therefore it is necessary to perform a due analysis of the existing situation still before selection of the location, which could be performed in co-operation with a specialised company.
The advantages which are available to proprietors of private international banks significantly prevail over the advantages offered by a majority of other investment tools, such as investment funds, mutual investment co-operatives, credit and loan co-operatives, investment societies, etc. Financial activities excluded for banks only, as a tool for direct access to international capital markets, inter-bank advantages in the form of wholesale borrowing and reduction of foreign exchange fees are suddenly available to natural persons in the position of an offshore bank owner.
The following aspects belong among the main advantages of private ownership of an offshore bank:
- Profit. All banks, whether foreign or domestic, borrows monies from their depositors at a lower interest rate and lend them in turn to their borrowers at a higher interest rate. The proprietors of a private international bank receive money not only from the depositors, but also generate their profit from the possibilities of handling the cash which is available to banks only.
- Privacy. Strict laws concerning bank confidentiality in the host countries protect the interests of financial institutions from unauthorised probes of governmental agencies, tax officers, persons with legal claims or aggressive corporate competitors. A private international bank provides protection from financial break-through attempts which are quite usual in the domestic banking sector.
- Tax protection. International financial centres have acquired the goodwill of legal tax heavens. Since the host countries tax the incomes resulting from international activities of qualified banks at a low rate - possibly they do not tax it at all - a private international bank can protect dividends, interest and managerial fees of its proprietor from levies in favour of tax authorities of the country where the proprietor is resident or citizen.
- Ownership. Ownership of an offshore bank is burdened by minimum bureaucratic requirements. It is possible to own a private international bank at a surprisingly low price, and the proprietor of the bank furthermore does not need a number of bank authorisations, as it is in the case for continental onshore jurisdictions. In most cases a sufficient qualification is represented by a formed experience in this sector or good bank references and a business plan, which will convince the authorities of the host country about your honest business activities.
- Asset protection. The assets deposited into your own private international bank are immune against all judgements and judicial orders of forfeiture or other tasks, issued in your home country.
- Image. As a proprietor of an offshore bank you will enter into the world of private international bankers. People will admire you (and in our geographical latitudes they will also envy you ...) from your business partners and you will create an impression of a rich individual with whom it pays to do business.
- Diversification of assets. The best way of how to secure assets is their geographical distribution and diversification. There is no better way of how to implement such a distribution than locating them in one or more private international banks, which can be owned and operated by you in accordance with your personal intents.
- Integration. An overwhelming majority of offshore banks at present offer the most up-to-date manners of communications and account management, such as Internet Banking, on-line broker services, e-Commerce and a number of other, on-line products, which are available to any client in the world for 24 hours and 7 days in a week. Also your offshore bank can be one of the e-banking pioneers and enjoy a share in the cake of multi-million dot.com business.
- Reserves. A number of jurisdictions do not require keeping the capital reserves. Some offshore banks are not obliged to keep reserves at the Central Bank.
- Regulation barriers. Offshore banks are able to avoid a large quantity of smaller as well as expensive regulation barriers which apply to domestic onshore banks.
- Free choice. Offshore banks are not forced to purchase certain types of securities (such as government bonds), they can freely choose for allocation of their resources according to their own choice and strategy.
- Interest. There do not apply any credit ceilings for international banks, which would prevent them from using profitable transactions, and no requirements on minimum and maximum interest rates declared by the Central Bank.
- New technology. A number of jurisdictions have missed technological development and demand for modern services. This means that there are still many jurisdictions where the banks cannot provide e-Commerce, payment systems for Internet clearing of payments in the B2B and B2C regimes yet. These limitations do not apply to an overwhelming majority of offshore banks.
The information and backgrounds required in an overwhelming majority of countries of the world from the bank license applicant are as follows:
- Bank name and its legal form
- Applicant statute (whether the matter concerns establishment of a branch office of a foreign bank or a new company)
- Names and curricula vitae of the bank directors
- Certificates of criminal impeccability of applicants and directors
- Bank and business references
- Submission of information about economic management of the firms of the applicant(s)
- Identification of the bank shareholders
- Identification of the type of issued shares of the bank (registered shares, priority shares, shares without voting rights, etc.)
- Denomination of the issued shares of the bank and type of currency used
- Capital structure of the bank and capital security
- Capital reserves of the bank
- Information stating from what resources the bank will be invested
- Document of certifying that the registered capital has been paid up (if registered in the host country)
- Document certifying that all taxes, stamp duties and royalties have been settled
- Identification of the registered office in the host country
- Identification data of the registered agent or representative (if required)
- Identification data of the auditor and lawyer with a registered office in the host country
- Type of intended services which are to be provided
- Territorial operation range of the bank
- Manner of the company protection from attacks of fraudulent or criminal conduct
- Business plan of the bank (the authorities generally require a balance sheet to 3 to 10 years)
- Benefits for the host country resulting from the bank operation
- Signed and presented applications for the issue of the bank license
Services which we can offer you:
- Analysis of jurisdictions, where to establish an offshore bank
- Selection of a suitable jurisdiction
- Preparation of all backgrounds for filing a bank license application
- Establishment of a company which will apply for the bank license
- Representation of your company in the license proceedings
- Providing of complete advisory services connected with the bank license proceedings
- Providing of professional assistance after the obtaining of the license
- Providing and recommendation of bank software for on-line banking services
- Putting completely the bank into operation
- Bank staff training
- Preparation of background information for the bank and its proper operation
- Ensuring of the registered office for the bank
- Ensuring of Nostro accounts
- Ensuring of Telex a Swift services
Summary of the 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 up market 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 favour 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 tunneling profits offshore and minimizing on taxes! Once you sign up, we will show you a unique insider strategy how to reduce your tax load 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!