Offshore bank licensing is a matter that is taken very seriously given the challenges that confront banking and other financial systems globally. Offshore bank licensing is conducted under very rigid conditions based on domestic and internationally set guidelines.

Offshore bank licensing may be undertaken in different ways depending on the jurisdiction in question and how its regulatory system is designed to operate, but general procedures concerning due diligence, Know Your Client, solvency margins and banking activities are basically equal.

Offshore banking can be fitted into broader asset protection strategy which include IBC incorporation and offshore trust formation. Second citizenship is available to those interested in further seeking business opportunities and new markets, plus freer travel and low tax incentives. There are lots of benefits to get from citizenship by investment some of which are greater security of monetary resources and physical safety. Dual nationality creates greater access to investment and employment.

Offshore bank licenses are normally issued in varying categories according to the type of banking and financial services that a bank proposes. For example, there is Category A and Category B offshore bank licensing depending on the category that the offshore bank service fall in, as well as Restricted Class A Bank Licenses if an offshore bank is limited to or intends to limit its activity to a particular mode of operation or a specific number/type of services and Unrestricted Class B Bank Licenses which are issued to offshore banks that provide a very wide range of offshore banking services. Unrestricted offshore bank licensing is often what a local or national bank may apply for since it offers banking services to the domestic market and offshore banking to the foreign market.

Offshore bank licensing is also a relatively advanced procedure. Offshore banks often don’t solely conduct offshore banking business, and may provide international trust services which require specific offshore bank licensing.

Offshore bank licensing is regulated in compliance with the rules, guidelines that are developed domestically by the Financial Services Commission and the Government, specific laws enacted for this purpose, and according to international standards that have been established for supervising offshore bank licensing procedures by international agencies. Some of these agencies are the Basel Committee, the Offshore Group of Banking Supervisors, and the Association of Supervisors of Banks of the Americas and the Caribbean Group of Banking Supervisors.

In Bermuda for example, banking licenses are issued under two main categories, which are deposit company license and banking license. Under The Banks and Deposit Companies Act 1999 a general prohibition was put on the conducting of offshore and domestic deposit-taking business without being duly licensed or exempted from holding a license. At the moment of obtaining its offshore bank licensing, a bank is also required to have minimum net assets of $10 billion, while deposit companies are required to have a minimum of $1million.

Basic offshore bank licensing requirements that banks are required to respect include having a representative office in the jurisdiction, carrying on business in a manner that is in keeping with rules and regulations for the protection of client’s interests, maintaining the established levels of solvency, paying the yearly offshore bank license fee and handing in all relevant financial statements.

Offshore bank licensing is necessary to ensure that all service providers are regulated and that the authorities are aware of the number of offshore bankers that are operating. Offshore bank licensing also makes offshore banks aware of the standards, rules and regulations that they are required to uphold and so, carry on their banking business according to strict ethics and banking principles for the continued betterment of the offshore banking industry.

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