Basic types of the offshore banking licenses
The general banking license is in most of the jurisdictions seen as a license for providing services in the place of registration or the place where the public international banking services are provided. Banks behave like other banking entities, they may receive deposits from the public and operate normal banking services provided to residents and non-residents. In the most of countries, however, such activity is limited to providing services to non-residents, ie. exclusively to offshore banking services. This type of offshore bank is determined in relation to the provision of commercial bank services in an offshore regime
The limited banking license (often referred to as “internal” license) is a license which limits territorial activities of the bank, the possibility of a providing services in foreign currencies or to certain persons. In most of cases the bank is not allowed to accept deposits from the public and shall provide its services to entities listed in the banking license only. This bank is used as a so-called corporate bank for active management of cash flow.
Offshore banking company incorporated in such a way may become a efficient tool for:
- tax planning
- strengthening the financial group or holding company reputation
- active cash flow management
- issuing warranties and guarantees for tenders
- easier access to financial markets
- progressive trade financing of holding company or financial group
- setting up of confindetial and flexible bank accounts
- loans providing
Most offshore banks are not subject of taxation, they do not pay withholding taxes, fees for issuing or receiving checks or other forms of direct and indirect taxes. Another important factor of offshore banking services is strict anonymity and confidentiality, which is highly appreciated by many investors and depositors.
These offshore banks are fully respected in widespread international banking community, as evidenced by the fact that the vast majority of international banks are domiciled in tax heavens such as Bahamas, Cayman Islands, Jersey, Guernsey, Labuan, Isle of Man or Hong Kong.
Leading bank centers with very low or no taxes and a highly liberal environment are largely concentrated in three geographic areas, in the Caribbean, Europe and Pacific. The true is, that the laws in these different foreign jurisdictions differ widely, and that one jurisdiction may be at a certain moment far more attractive than other jurisdictions. It is therefore important before selecting a place to carry out a proper analysis of the current situation which can proceed in cooperation with a specialized company.
The benefits that are available to owners of private international banks, significantly outweigh the benefits of most other investment instruments, such as investment funds, mutual investment associations, credit unions, investment companies etc. Financial activities, which is reserved for banks as an instrument for direct access to international capital markets, interbank benefits in the form of interbank loans and lower fees for foreign exchange are suddenly available to natural persons in the position of the offshore bank owner.
Information required in the majority of countries from the banking licenses applicants:
- Bank name and the legal form
- status of the applicant (whether for the branch of foreign bank or a new company incorporation)
- names and CVs of the bank directors
- certificate of criminal record of the applicant and director
- bank and trade references
- information on economic management of the applicant´s company
- the identity details of the bank´s shareholders
- information on the type of issued bank shares
- the nominal value of the issued shares of the bank and the type of currency issued
- capital structure and capital and capital reserves
- source of funds
- document certifying the payment of all taxes and royalties
- residency in the host country information
- information on the registered director or representative (if necessary)
- information on the auditor or legal representative in the host country
- information on the services to be provided
- territorial area of bank´s activity
- public fraudulent or criminal conduct protection instruments
- business plan (for 3 – 10 years)
- benefits for the country arising from the bank´s activity
- signed and filled bank license application
In all these jurisdictions is required appropriate front office and at least two local employees at the country of banking license. Most offshore jurisdictions has a restrictive approach, due to they prefer only existing banks or at least a major financial companies, such as Swiss trust companies that can demonstrate their existence and favorable balance of funds, on which they can rely. Legislation is constantly being amended and therefore it is almost impossible to keep up with all the latest information.
Most of the available jurisdictions are listed in the table below. Fees for the unlimited license or A-grade license has increased the required amount of paid-up capital to at lease 500,000 USD and require a minimum balance of at least 1 million USD, which is often more than the amount to be paid at central bank as a hedge. In most cases, the appropriate amount to secure the agreement is 3 million USD or more, as well as strong business plan with relevant experience. As mentioned above, there is a requirement to establish a physical branch in the jurisdiction of licensing, at least with two local employees. At least one of them must be manager with practical experience with the bank´s activities and the knowledge of banking sector.
| Jurisdiction | Bank type | Incorporation fee (USD) | Annual fees (USD) | License fee or tax (USD %) | First year in total (USD) |
|---|---|---|---|---|---|
| Antigua | Offshore | 20 000 | 8 000 | 15 300 | 43 300 |
| Bahamas | General license | 25 000 | 8 000 | 25 000 | 58 000 |
| Bahamas | Limited license | 20 000 | 8 000 | 5 000 | 33 000 |
| Barbados | I – grade | 20 000 | 8 000 | 12 500 | 40 500 |
| Barbados | II – grade | 20 000 | 8 000 | 12 500 | 40 500 |
| Barbados | III – grade | 15 000 | 8 000 | 12 500 | 35 500 |
| Belize | I – grade | 18 000 | 8 000 | 20 000 | 46 000 |
| Belize | II – grade | 15 000 | 8 000 | 15 000 | 38 000 |
| Cape | Offshore | 20 000 | 8 000 | various | Min. 28 000 |
| Cayman Islands | A – grade | 35 000 | 8 000 | 51 000 | 94 000 |
| Cayman Islands | B1 – grade | 25 000 | 8 000 | 14 500 | 47 500 |
| Cayman Islands | B2 – grade | 25 000 | 8 000 | 7 320 | 40 320 |
| Cook Islands | A – grade | 20 000 | 8 000 | 10 000 | 38 000 |
| Cook Islands | B – grade | 18 000 | 8 000 | 2 – 6 000 | Min. 28 000 |
| Dominican Republic | Onshore/Offshore | 25 000 | 8 000 | 20 000 | 53 000 |
| Dominican Republic | Offshore | 20 000 | 8 000 | 8 000 | 36 000 |
| East Timor | International | 20 000 | 8 000 | n/a | 28 000 |
| Grenada | Offshore A – grade | 20 000 | 8 000 | 15 000 | 43 000 |
| Grenada | Offshore B – grade | 15 000 | 8 000 | 13 000 | 36 000 |
| Labuan | Offshore | 20 000 | 8 000 | 16 200 | 44 200 |
| Montserrat | Offshore | 12 000 | 8 000 | 15 000 | 35 000 |
| North Cyprus | OBU | 25 000 | 8 000 | 10 000 | 43 000 |
| Palau | International | 20 000 | 8 000 | 300 | 28 300 |
| Panama | General license | 25 000 | 8 000 | 30 000 + | Min. 63 000 |
| Panama | International license | 25 000 | 8 000 | 15 000 | 48 000 |
| Panama | Represention office | 18 000 | 8 000 | 5 000 | 31 000 |
| Puerto Rico | OBU | 20 000 | 8 000 | 5 000 | 33 000 |
| Samoa | B1 – grade | 20 000 | 8 000 | 17 500 | 45 500 |
| Samoa | B2 – grade | 18 000 | 8 000 | 7,5 – 10 000 | Min. 33 500 |
| Saint Lucia | A – grade | 20 000 | 8 000 | 25 000 | 53 000 |
| Saint Lucia | B – grade | 15 000 | 8 000 | 15 000 | 38 000 |
| St. Kitts | ODTC | 20 000 | 8 000 | 8 000 | 36 000 |
| St. Kitts | ODTC – limited | 15 000 | 8 000 | 4 000 | 27 000 |
| St. Vincent | Offshore A – grade | 20 000 | 8 000 | 10 000 | 38 000 |
| St. Vincent | Offshore B – grade | 16 000 | 8 000 | 7 500 | 31 500 |
| Vanuatu | Offshore | 20 000 | 8 000 | 15 000 | 43 000 |
* The incorporation fee includes fees for expert advisory on setting-up the company, fee for processing business documents, notary fee, legalization fee, filing fees and stamp duty for paid-up capital. Please note that all charges herein may change..
* Annual fees for domicile, payable annually in advance, includes the provision of office, which requires local companies, company secretary (executive director) or an authorized representative.
* Further expenses on courier of documents are charged.
* Minimum requirements for the paid-up capital range from above 1 million USD. (The amount of paid-up capital related to limited license is typically in the range of 250,000 to 500,000 USD).
In the case of interest in bank establishing in one of jurisdictions listed please send us an e-mail with the details of your plans and requirements.
Our experience is that the vast majority of those who have turned to us with a request to obtain a banking license, either do not have the necessary capital, the long history of its business banking experience or other requirements that are necessary to be fulfilled for obtaining a license in those jurisdictions. Furthermore, many of these jurisdictions, although it is theoretically open to newcomers, can be extremely selective in granting licenses to newcomers, even if they meet all the requirements.
Many of them are intoxicated by nostalgic belief that there are still many of countries which provides banking licenses with minimum capital requirements, which existed in the eighties and nineties. All of these countries have strong rules or do not issue banking licenses. Therefore, the above enumeration has to be considered as very subjective, which may change. All of above issue licenses under certain conditions, the license will be issued only if the applicant comes to the table with an offer that is significantly higher than the minimum requirements.
The fact is that for example St. Vincent and Vanuatu has a minimum capital requirements of 1 million USD (representing as absolute minimum current worldwide requirement). However, for a successful outcome it will be require at least two to three times the minimum capital requirement. Therefore we recommend for any potential applicant to have minimum capital of at least 3 million USD if successful and fast process of obtaining a license should be ensured.
Offshore companies
Advantages
 | entering the international market |
| tax relief |
| less paperwork |
| incl. bookkeeping |
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Our partners
In 1996 we became a registration agency as Parker & Hill Ltd. In 2011 we underwent a transformation and began to operate internationally under Parker & Hill Inc.
We are a member of the international consortium NWMS Ltd. We incorporate companies directly for you within 16 jurisdictions. We are not re-seller, we are the registration agency.