Offshore Pro Group has particular expertise in setting up offshore, international and restricted licence banks.
Some out-of-date information on the internet might suggest it is easy to set up an offshore bank – but this is incorrect. Although the capital requirements are relatively low, banking regulators everywhere are very strict on ensuring that only viable banks with serious, professional management are allowed to do business in their jurisdictions.
Types of Offshore Banking Licences: Class A and Class B
Offshore banking licences are typically divided into two categories.
CLASS A BANKS are full scale international banks, licensed to take deposits and carry on business with any client anywhere in the world.
CLASS B BANKS, also known as restricted licence offshore banks or ‘pocket banks’ are licensed only to do business with certain named individuals, companies or groups. They are used either for internal company operations (for example, treasury management and financing for different international subsidiaries of one group of companies, and close business partners) or for private wealth management (family and multi-family offices, opening accounts for family members, family trusts and foundations etc) It is easier to obtain a restricted banking licence than a full licence, and after establishing a good track record it may be relatively easy to apply for an upgrade to a full unrestricted offshore banking licence.
Some jurisdictions, such as Panama, may be distinguish between licences to do business in the local market as against doing business with non-residents, a group that includes local companies controlled by non-residents. Most Caribbean jurisdictions also separate their local and international or offshore licensing categories.
Alternatives to Full Offshore Bank Licences
Although it is of course possible to set up an offshore bank from scratch, we find that clients often come to us first of all with the idea of setting up a bank, but after analysis of their business plan we are able to advise on a quicker, simpler and lower cost solution. For example, a hedge fund licence combined with a separate Private Trust Company might fit the requirements of clients wishing to carry out investment banking activities.
It is, therefore, generally recommended to set up and acquire a track record in a less regulated kind of financial services company first: for example a hedge fund, a licensed forex trading company, or a Payment Services Provider, depending on the type of banking business you plan to carry out. Other alternatives might be Credit Unions or Treasury Companies or even Multi-Client Private Trust Companies.
If you already have experience and a verifiable track record in the financial services business, and a clear idea of what you want to do, we can certainly help you with your application for a bank licence. We can also help you establish the necessary correspondent relationships, without which you will be unable to do business.
Recommended Jurisdictions for Offshore Bank Licences
Jurisdictions where we have particular expertise are Panama, Belize, Commonwealth of Dominica, Nevis and St Lucia, while we have a lot of experience working with Russia/CIS clients and Latin American clients and the particular issues these clients may face when applying for offshore bank licences.
Offshore Pro Group’s senior management are at your disposal for consultations on offshore bank licences. Contact us today.