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Offshore Banks registration

Registration of the offshore bank can be viewed of two different points: registration of the offshore bank as a separate and autonomous entity or as a subsidiary and other supplementary institute to already existing banking structure. Under all circumstances the primary intent of the registration is to create the most effective tax planning scheme either for a banking structure or a particular business.

In the ordinary way, an offshore bank is a financial and credit institute which accommodate financial services to legal entities or individuals including serving of offshore companies registered in the country of the offshore bank’s registration.

Offshore banks attract with preferable taxation as they are tax exempted or operate with a lower cost base than resident banks. An offshore bank must pay annual registration and licence fees.

As a rule there are special types of licences for offshore banks’ activities, i.e. in comparison with resident banks the activities of offshore banks can be lightly or considerably restricted to provided services. Bank licences can be easily received by large international financial institutions, corporations, groups of companies and investors.

The British Virgin Islands

Directive instructions for the granting of banking licences to operate within or outside of the British Virgin Islands were approved on November 26, 1993.

Since 1987, Bank licencing policy in the BVI has been relied on the principles of Banking Supervision which were specified by the Basle Committee on Banking Supervision.  Following the recommendations to all Dependent Territories by Her Majesty’s Government, in consultation with the Bank of England, Government’s policy has been refined and extended to make explicitly clear the principle of effective consolidated supervision. This principle admits that the supervision of banks engaged in international activities needs a close co-operating among the government bodies.

The directive also accented that the granting of a Banking Licence is discretional and not to be a privilege right of any applicant.

Licencing Policy

1. The policy with respect to bank licensing, except where the bank is predominantly locally owned and primarily doing business within the Territory 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; and
(iii) wholly-owned subsidiaries of 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.

2. 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.

3. 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 be 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 co-operate 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.

4. 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 in paragraph 3(f), the Licensing Authority 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 Authority’s duty to co-operate with other supervisory bodies.

5. Any subsequent change of ownership once the licence has been granted, will require the prior approval of the Licensing Authority and will be subject to independent verification and checking by the Authority, similar in scope to that requirement of the original applicant.

The Commonwealth of Dominica

Offshore banks registration in Dominica complies with the legislative acts "The Offshore Banking Act", 1996 and "Offshore Banking (Amendment) Act", 1997, which allow registering an offshore bank within 1-2 months with a minimum possible amount of the authorized capital of 1,000,000 USD that is a very loyal requirement comparing with the requirements of offshore banks registration in other countries.

A Banking Licence in Dominica

Onshore Licence is commonly given to onshore banks for all types of activities, that means the bank is an income tax payer.

Offshore Licence is granted to offshore banks in Dominica and it allows the licencee to engage in all types of offshore banking business, i.e. to operate with any foreign companies and individuals, as well as with IBCs registered in Dominica. Offshore banks in Dominica are tax exempted and must pay only annual government licence fee.

Offshore-onshore licence allows to engage in domestic banking and to conduct banking services to both residents and non-residents of Dominica. Only the profit received from banking business with the residents is a subject for taxation. In general the process has two stages: at first to receive an offshore licence and then an onshore licence.

It was already mentioned that obtaining a licence usually takes up to 2 months from the date of application submitted with all necessary documents attached. Here are the requirements for obtaining and renewing an offshore bank licence:

  1. According to the Dominica Offshore Banking Law Act, the process of an offshore bank registration must be supervised by an authorized agent, who will act as a intermediary and behalf of your interest in both incorporating of a local company and obtaining the licence; the agent will also supervise your banking business during all period of your bank’s activity;
  2. It is a mandatory for banks to set up a local representative office in Dominica, it can also be the Head office of the bank;
  3. An authorized capital in the amount of no less than 1,000,000 USD must be paid in;
  4. The amount of 150,000 USD must be tied up in Dominica Government bonds during all  period of your bank’s activity;
  5. The Government banking licence must be renewed by January, 15th of the following year upon payment of the annual renewal fee. The fee payable for an offshore banking licence is 8,000 USD, the fee for an offshore-onshore banking licence is 20,000 USD;
  6. Accounts of the bank must be audited and forwarded to the Government of Domica annually. The accounts must be certified by a local or internationally recognized audit company.

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