Offshore Banking License

The Requirements to Obtain a License

The offshore banking license is issued by the regulatory body in which the bank is established. There is a relatively long and complicated procedure that goes into the application. This procedure will also depend on the type of bank license that you wish to apply for. Licensing is generally broken down into different categories, while each category has a different specialization, and a different time frame involved in the banking license application process.

Because of the number of different specialties that banks can engage in, there are also bank licensing packages available, with the main bank license being one that allows to engage in all of the activities that you would expect a major bank to engage in, including retail banking, merchant acquiring, cash management, fund management and trade finance. Obtaining a bank license that allows you to engage in all of these activities will generally take the longest, and cost the most, however, you can also apply for one that has fewer or even only one specialization.

CRITERIA FOR ATTAINING A BANK LICENSE

  1. Applicants who can pass rigid due diligence examinations.
  2. A management team with banking expertise, knowledge and experience.
  3. Shareholders who have sufficient net worth to ensure that the bank is adequately capitalized.
  4. A professional business plan which can pass the scrutiny of the regulator.
  5. A commitment to establish a physical presence in the jurisdiction including local personnel who have an understanding of the bank’s operations.

APPLICATION REQUIREMENTS

The applicant for an offshore bank is normally an International Business Company (IBC) which is preferred over a local company because:

  • an IBC is much easier and quicker to constitute than a local company;
  • local company is required to file annual tax returns;
  • an IBC is exempt of any form of taxation

CAPITAL REQUIREMENTS

The size of a minimum paid up capital would depend on the Bank License Category and jurisdiction. Normally there are two license categories:

(1) Category A, which allows banking in general, and

(2) Category B, which allows banking with persons or groups specifically described in a written undertaking attached to the license application.

If applying for a Category A banking license, the minimum paid up capital starts from USD 1,000,000 (or its equivalent in another currency), out of which USD 500,000 (in very few jurisdictions it is USD 100,000) is a statutory deposit that should be blocked or deposited in a manner prescribed by the regulator once the license application has been approved. If applying for a Category B license, the minimum paid up capital would normally be US$500,000 (or its equivalent in another currency), out of which USD100,000 is a statutory deposited that should be blocked as described above.

Contact Us today to get a preliminary consultancy with up-to-date information and interpretation of legal and regulatory requirements that will affect your bank formation.