Through an offshore bank, you may access the
international marketplace for your capital raising endeavors. Rather than
secure capital personally for your projects, you may do so in an institutional
capacity through your own personal offshore bank and the deposits it receives.
If you have a business currently in operation, your corporation can hold its
assets in its own offshore bank to secure additional privacy, rather than have
the funds held in an unrelated depository. This arrangement will also
facilitate money movements between subsidiaries of your corporation.
It is possible that the operation of the private
offshore bank could itself become a profit-center. Offshore banks may pursue
investment activities from which on-shore banks are prohibited, such as
underwriting. Additionally, you may utilize your offshore bank to provide
captive insurance or real estate brokerage services.
Located in a jurisdiction outside your country,
the activities which you conduct through your private bank will be more
confidential and secure. You will be able to extend the same privacy to your
clients, along with the other benefits you can offer, such as letters of
credit to third parties. A final measure of security is that offshore banks in
many jurisdictions offer confidentiality with respect to ownership.
From a tax perspective, bank profits are generally
not taxable to the owners. Further, in some jurisdictions, there are treaties
which make banking easier from a withholding tax perspective. Where there is a
treaty in effect, there is little or no requirement of withholding.
Some people have awareness of the benefits of a
private bank, but are intimidated because they feel that the required
documentation could be cumbersome, or that there is greater risk associated
with it. Compared with the stringent requirements of chartering an on-shore
bank, it is not difficult to form and own an offshore bank.
We can establish a private bank for you for as little as
US$25,000. If you feel that your offshore needs are complex enough to warrant
the establishment of an offshore bank, then you should
for additional information.
The following offshore jurisdictions
have the facility to grant banking licences to qualified applicants. They
offer some interesting possibilities because:
a) They will allow a bank to operate
free of tax on profit and
b) It is possible to set up a bank
without the need to maintain a physical presence within the jurisdiction other
than that which can readily be provided by a service company.
Best Offshore jurisdiction to form a Bank:
SAINT VINCENT AND THE GRENADINES:
Most of of our clients have preferred the banking laws of St. Vincent which is
both recognized in global banking circles with international correspondents
and it is a country that maintains a degree of flexibility that many bank
owners prefer.
Confidentiality in relation to the incorporation and the conduct of business
of an International Banking Licence has been preserved by the Confidential
Relationships Preservation (International Finance) Act, 1996 and by the
International Banks Act 1996. There are no exchange control restrictions
applicable to offshore transactions, no stamp duties of any kind on any
transactions, no corporation tax, no income tax, no withholding tax, no
capital gains tax, no estate, inheritance, succession duties. St. Vincent
enjoys the favor of political independence and stability, a skilled work
force, duty free importation of equipment and fixtures for use in offshore
banking business, excellent International Banking Laws and excellent
telecommunications, trained Lawyers, Bankers, Accountants, low crime rate and
finally a conducive natural environment. The following are the licenses which
are issued under the International Banks Act 1996: A Class I Offshore Banking
Licence entitles the Licencee to engage in offshore banking generally outside
the country. A Class II Offshore Banking Licence entitles the Licencee to
engage in offshore banking with persons named, or groups specifically
described in a written undertaking. Requisites: Local domestic company
or an International Business Company must be incorporated under the laws of
the State of Saint Vincent and the Grenadines; The prescribed minimum capital
requirement for a class 1 licence is US$500,000 and for a class 2 licence is
US$100,000; There must be at least two directors, one of whom must be a
resident. The directors are required to be natural persons; A principal office
and place of business in the State; A registered agent who must be resident
within the state and who must not be the resident director; A class 1 licence
applicant must deposit US$100,000 cash or purchase Government or securities of
equal value; A class 2 licence applicant must deposit US$50,000 cash or
purchase government bonds or securities of equal value; Application fees are
US$1,000 for Class 1 licence and US$750 for Class 2 licence; Narrative
description of principal's experience in banking business and character
references together with other such particulars as may be prescribed;
Indemnity insurance coverage may be required based upon the nature and type of
the business to be carried on by the licencee. Fees: Payable on the
grant of: (i) Class I Licence - US$10,000 / (ii) Class II Licence - US$7,500.
Annual Licence Fees: (i) Class I Licence - US$3,000 / (ii) Class II Licence -
US$2,500
ANGUILLA: Anguilla is a small British colony located
at the northernmost end of the Leeward Islands in the Caribbean. It has a very
stable government. Its annual licensing fee is US$3,800 for banks maintaining
a "physical presence" on the island (i.e., a local office and resident agent),
and US$7,600 for banks with no physical presence. Fees are assessed on a
calendar-year basis and advance payment of first year fees is required. The
infrastructure is good here, communication systems are excellent (calls can be
direct dialed from the U.S.), the mail system is good and the island is a
pleasant, if somewhat quiet vacation spot. An international airport with
direct U.S. connections is located on the neighboring isle of St. Marteen, and
there are several flights a day between St. Marteen and Anguilla, as well as a
ferry service. If greater ease of access is important to the bank's
operations, Anguilla-based banks may be managed from Montreal, Hong Kong, or
Zurich. Anguilla is considered comparable in every respect to leading offshore
banking centers and the Anguillan government is still granting charters, which
makes it our number one choice for a Caribbean-based international bank at
this time. Government of Anguilla's policy with respect to bank licensing is
as
follows:
a) full banking activities will only be permitted by branches or subsidiaries
of banks with a well established and proven track record and which are subject
to effective consolidated supervision by their home supervisory authority.
b) off-shore banking will only be permitted by:
(i) branches or subsidiaries of banks with a well established and proven track
record which are subject to effective consolidated supervision;
(ii)banks which, although not subsidiaries, are closely associated with an
overseas bank, and which, by agreement, will be included within the
consolidated supervision exercised by the overseas bank's home supervisory
authority;
(iii) wholly-owned subsidiaries of certain acceptable non-bank corporations
whose shares are quoted on a recognised stock exchange, where the objective of
the subsidiary is to undertake in-house treasury operations only, and where
the operations are fully consolidated within the published financial
statements of the parent company.
Banks will only be granted licences if their place of incorporation, mind and
management are within the same jurisdiction, or, in the case of a subsidiary,
if the mind and management are located in the jurisdiction in which
consolidated supervision is being exercised.
In line with internationally accepted good practice in relation to bank
licence applications, the Licensing Authority should expect as a minimum to be
satisfied that:
a) the management has proven experience in a relevant field of banking
b) the controllers are fit and proper people to undertake the functions
envisaged and that the ongoing management will be competent;
c) the institution will conduct its business in a prudent fashion;
d) the institution has devised an appropriate and sustainable business plan;
e) adequate capital and other resources will be provided in relation to that
business plan;
f) direct confirmation has been received from the supervisory authority in the
country in which the institution or its proposed parent is incorporated, that
the authority;
(i) consents to the establishment of the institution in the host territory;
(ii) will exercise consolidated supervision over the institution's overall
activities, including within the host territory; and
(iii) will cooperate in the sharing of regulatory information with the
Licensing Authority.
g) the applicant will appoint approved auditors who will perform that work
according to internationally accepted auditing standards.
h) the applicant will disclose to the Licensing Authority all information that
the latter legitimately needs to fulfil its overall supervisory
responsibilities.
A prerequisite for the maintenance of sound banking standards is careful
consideration of the financial standing, overall probity, skills and
reputation of new banking applicants. To this end in addition to obtaining the
formal consent referred to above, Government of Anguilla will consult parent
supervisory authorities about these aspects in relation to each new applicant
seeking to establish a bank in the territory. This consultation is an
essential part of the Anguillian Government's duty to cooperate with other
supervisory bodies.
ANTIGUA:
Antigua is an independent Caribbean Island which is currently welcoming
applications for a banking licence which would be unrestricted (expect from a
prohibition on doing business with residents of the Caricom area) There is a
requirement to have a paid in capital of US$ 1 million but no requirements
regarding capital reserves or loan ratios are imposed and no physical presence
on the island is needed which cannot be provided by a management company.
Antigua therefore represents a real possibility to obtain an unrestricted
licence without the considerable costs which would be experienced in most
other competitive jurisdictions. The capital requirement is higher than that
which is experienced in some of the Pacific rim Islands but Antigua is one of
the few places where an unrestricted licence is available with relative ease.
We estimate the costs of obtaining a licence would be approximately US$ 45,000
which would include our services in providing the necessary local director and
management services which are required.
BAHAMAS: The
Bahamas is situated in the Caribbean and is considered one of the most
beautiful international banking centers in the world. It has a fully
independent government. Communications systems are considered excellent and
there are frequent air and sea connections with the U.S. There are no taxes on
international banking income. Experts consider the quality of its banking
regulation to be excellent and it has a comprehensive banking secrecy law.
However, US$1 million dollars in paid-in capital is required in order to
obtain and operate an unrestricted licenced international bank there. This
type of licence can be obtained by private individuals but only if they are
able to show that they have substantial high net worth. Restricted licences
are more readily granted to financial institutions. A restricted licence
enables the holder to provide banking and/or trust services only to a
specified class of associated individuals or companies who would normally be
named in the licence or in a schedule attached to the licence. The minimum
paid up capital is only US$100,000. Fees for obtaining a restricted licence
would be in the order of US$30,000. Both type of banks must maintain reserves
in cash, or near cash, equal to 20-25% of deposits. The government's attitude
toward international banks owned by non-bankers is considered fairly good, but
the Bahamas would probably be a poor choice because of the the stringent
capital requirements.
CAYMAN ISLANDS:
Like Anguilla, the Caymans are a British colony. This assures bank owners that
they will receive a measure of political stability. The annual license fee is
US$9,000. The quality of the Cayman Islands' banking regulations is considered
by experts to be the best in the world, though there has been some erosion of
support for the banking laws recently due to several frauds and bad publicity
resulting from association with insider-trading and money-laundering cases,
There has also been increasing pressure from the U.S. for an
information-sharing agreement. The international banking infrastructure there
is considered excellent, with ample facilities, and there are no taxes on
international banking income. In spite of this, however, the Caymans have
managed to retain very stringent banking secrecy laws, A major drawback is the
paid-in capital requirement of US$500,000 in cash. Communications and postal
systems are excellent. It is considered a desirable vacation spot, and air
connections from the Cayman Islands to the U.S. are direct. However, the
government's attitude toward private international banks owned by non-bankers
is poor. Thus, though the Cayman Islands rate highly in comparison to most
other centers, they would probably be a poor choice because of the poor
attitude toward international banks owned by non-bankers.
COOK ISLANDS:
The Cook Islands are located in the South Pacific off the shores of Tahiti.
They are an independent nation in free association with New Zealand, but are
self-governing both internally and externally. The annual license fee for
international banks is US$1,000. The quality of the banking regulations is
considered excellent. The paid-in capital requirement is US$500,000, US$10,000
of which must actually be paid in cash. Communications systems such as
telephone, telex and mail are excellent. The attitude toward international
banking is excellent, but the government's attitude toward international banks
owned by non-bankers is poor. Because of this and the high capital
requirement, it is currently rated a poor choice as a locale for private
international banks. It does, however, offer an attractive alternative. Under
Cook Islands legislation passed in 1982, it is possible to set up an
International Investment Bank -- which can perform most of the investment and
business functions of a regular bank, but which cannot accept deposits. As a
result of this distinction, there is no paid-in capital requirement. In
addition, the government's annual license fee for such an investment bank is
much lower than the annual license fee for regular private international
banks.
GIBRALTAR:
Gibraltar is a full member of the European Union so similar requirements are
imposed on banks incorporated in Gibraltar as those imposed for UK
banks. However, Gibraltar has certain distinct advantages: Banks can obtain
exempt status and therefore operate completely free of tax; The costs of
office space and staff are considerably lower in Gibraltar; There are
currently no banking applications pending in Gibraltar so the time-scale
between the application for and granting of a banking licence can be
considerably reduced; Note that the majority of the costs would be incurred in
having to employ two executive directors/managers with the requisite
experience and in installing the computers and systems which are appropriate
for a banking institution. Our fees for processing a banking application in
Gibraltar would be from around US$ 60,000 with further fees being payable on
success.
NAURU: The
Republic of Nauru (pronounced Naa-rue) is a former Australian territory. It
became fully independent in 1968. There is little risk of political
instability because of its constitutional government and the lack of an
adversary political party. The annual license fee is just US$1,500, plus a
US$500 local agent's fee, making it one of the lowest in the world. The
banking legislation was written by an attorney who specializes in tax havens.
This makes the banking legislation expertly suited for private international
banking. The paid-up capital requirement is one million Australian dollars --
or about US$730,000 at the conversion rate when this was written. However,
this may be reduced or eliminated subject to negotiation with the licensing
authority. Nauru has excellent telex and fair telephone service to the rest of
the world, but travel arrangements are difficult. However, if the Nauru bank
is managed from a location such as Zurich, this problem can be avoided. It is
a relatively undesirable vacation spot. Again, this is not a problem if the
bank is managed elsewhere, since one would never have to travel to Nauru.
Nauru has no taxes on all types of income. There is minimal red tape to
acquire a banking license, provided the minimum capital requirement can be
satisfied. Finally, Nauru has a good international banking infrastructure, an
excellent bank secrecy law and the government welcomes banks owned by
non-bankers. Given these factors, Nauru is currently our top choice for a
non-banker looking to establish an offshore banking operation in the Pacific
region.
NETHERLANDS ANTILLES:
The Netherlands Antilles are a Dutch colony or possession. There is no
particular license fee for an international bank established there. The
quality of the international banking regulations is considered good; however,
US$500,000 is required as paid-in capital, The communications systems are
excellent. It is a very desirable vacation spot, with several direct flights
from the Netherlands Antilles to the United States. The international banking
infrastructure is good, with enough attorneys and accounting firms to handle
international business. A small amount of tax is imposed on international
banking income, and some of the appeal of the Antilles was diminished when its
tax treaty with the United States was canceled in January of 1988. The
government's attitude is also poor toward international bank ownership by
non-bankers. The Netherlands Antilles does have a good international banking
secrecy law.
SAMOA: In our opinion Samoa is one of the better
offshore jurisdictions which currently offer restricted offshore banking
licences. Unrestricted licences are not obtainable by anybody other than
existing banks and require a minimum paid up capital of US$10 million. This
will probably be unattractive to most applicants. Restricted licences require
a minimum paid up capital of US$250,000 but the operations of the bank must be
run through a local trust company such as ourselves. This does mean that an
element of third party control and involvement in the affairs of the bank is
required but this has the advantage that local expertise is readily available.
Costs for a restricted licence would be US$25,000 and application time would
be approximately one to three months.
TURKS AND CAICOS:
The Turks and Caicos Islands are a British colony located in the Eastern
Caribbean, near the Bahamas. The annual license fee is US$7,500, and
US$500,000 is required as paid-in capital. The quality of banking regulation
is considered fair, as are the communications systems. As a vacation spot, it
rates high, with direct flights available from Miami. The lack of accounting
facilities makes the banking infrastructure a poor one. There is no income tax
imposed on international banks, but the government's attitude toward private
international banks owned by non-bankers is considered only fair, At present,
there is a limited international banking secrecy law. In comparison to other
centers, the Turks and Caicos Islands would appear to be one of the less
desirable selections.
VANUATU:
Vanuatu is an independent country in the South Pacific. Because of its unique
status and publicly stated attitude, it once posed less concern over political
stability than other, similar independent countries, However, there has been a
growing amount of conflict among different ethnic groups in recent years and
the prospect of political unrest has risen sharply. There has also been an
increase in Western concern over reported ties between some factions of the
Vanuatu government and the Soviet Union and Libya. On the financial front,
Vanuatu remains among the most liberal of the havens with a paid-in capital
requirement of only US$150,000 and an annual licence fee of US$3,000. The
quality of its banking regulation, enacted in 1970, is excellent.
Communications systems are excellent, and Vanuatu is considered a superb
vacation spot. There are two connections for travel to and from Vanuatu. The
business infrastructure is considered excellent, No taxes are imposed on
international banking income but the government attitude toward international
banks owned by non-bankers is considered just fair. Vanuatu does have an
adequate international banking secrecy law. Despite these outstanding
features, on a comparative basis, the current political uncertainty would
appear to diminish Vanuatu's appeal as a base for your private international
bank.
