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17. OFFSHORE BANK LICENSE

Main Kw: OFFSHORE BANK LICENSE

Secondary Kw: OFFSHORE BANK FOR SALE, BUY OFFSHORE BANK, OFFSHORE BANK

What are the components of obtaining Offshore Bank License?

Several components should be taken into consideration when trying to obtain an OFFSHORE BANK LICENSE. For offshore banking, these components are termed to be unique. You need to develop each area as baking is a highly regulated and licensed industry. Only then will the licensing board will derive satisfaction and favor you.

Top components to consider when considering OFFSHORE BANK FOR SALE

·       Business strategy: Comprehensive business strategy will be required. It is rather the heart of the bank license application. Hence, it is to include parent company audited financials or tax records, accounting of beneficial owners. It also should include projections of 3-5 years that are broken further by the business unit. Such projections are to cover liquidity ratios, risk, funds, break-even analysis, reserves, etc. The regulators should be convinced with the business plan. The applicant is expected to have a requisite experience, fine character, carefully funded plan. Also, he/she should know the risks involved including the compliance requirements to operate an OFFSHORE BANK. The business plan should be good enough to satisfy the licensing board, auditors and regulators.

·       Capital: Some countries have set specific criteria for capital requirements to set up international banks. The minimum capital amount should comply with the set statute. $1 million is the required capital in Dominica to be deposited in a government bank. The amount is $250,000 in Puerto Rico of paid-in capital along with a government deposit of $300,000. License is issued by both the jurisdictions with the minimum capital amount under the law. More cash is desired by other countries. The license can be obtained in Belize with $1 million. However, for an offshore banking license, the amount required will be around $3 to $5 million. Larger jurisdictions are known to negotiate capital on a case basis. A bank subsidiary from a popular destination for example can provide an offshore license with $ million capital in Panama. Without a major license, a Class-A license is to be obtained from Panama with a capital of $25 million.

·       Computer systems: It is likely to be the very foundation of the banking operations. If you BUY OFFSHORE BANK, the IT system should handle AML and KYC. It should also carry out compliance background checks, document management, transfer, account openings, etc. The government modules are likely to verify these modules carefully before giving the ‘go-ahead’ signal. For the international bank, compliance and core system modules are considered to be the largest startup expenditure. The general expenditure on the IT system is around $100,000 to $1 million. Implementing the IT system will take around 3-6 months. On obtaining a provisional license, the IT system is to be taken care of, which can be time-consuming.

·       Employees: The business plan submitted should include key personnel as well as the board of directors. They should possess extensive banking experience. Your employees and management should be locals. The Board of directors should include a couple of locals. More favors can be derived from the licensing authority if professionals possess an excellent track record. Moreover, the board members are to have omens knowledge in compliance and banking law. The basic thing you would like to manage is AML, KYC, account openings and correspondent banking. It will also include compliance in the same country of license issuance. Most banks located in small jurisdictions tend to place investment/trading management support in larger countries like Panama or Switzerland. Your license country should be large to offer quality employees in huge numbers. Your staff location will also play a crucial role to determine tax expenditure.

 

 

·       OFFSHORE BANK LICENSE: Very few countries support startup banks to get international banking licenses. For instance, offshore licenses are offered to banks with valid licenses obtained from major jurisdictions by Cayman and Panama. A license can be obtained to operate in the Cayman Islands if you possess a license from Germany or the U.S. This is because your home country already has imposed stringent regulations. With the existing license, an offshore license can be obtained with $5 million from Panama. But $25 million capital will be necessary to incorporate a new Class-A bank in this country. Dominica and Puerto Rico are, however, considered to be the most active of all jurisdictions to consider OFFSHORE BANK FOR SALE.

·       Compliance systems: It is developed generally around the IT system. It allows further development of an in-house team. Otherwise, compliance monitoring is to be outsourced to any reputed local law firm. All operational risks associated with the international bank derive from potential compliance program failure. You are likely to face huge penalties and even shut down much faster if you fail to know client requirements. It also involves FATCA OCEF reporting and money laundering rules. Your correspondent partner or the license board may shut you off from the system. Government regulators are likely to watch very carefully your compliance program, irrespective of your jurisdiction. Errors are likely to be dealt with swiftly.

·       Tax Considerations: Your corporate profits are not likely to be taxed by the majority of the offshore banking jurisdictions. Rather, they charge some license fee annually. Cayman is known to charge annual international banking license maintenance fees of $85,000. On the other hand, Puerto Rico is said to charge on corporate profits of 4% along with an annual fee of $5,000. If you BUY OFFSHORE BANK, the tax benefits on operating cost are quite substantial. However, to optimize the tax deals, you will require coming up with a comprehensive tax plan. During the initial phase, global tax planning is crucial. Only then can you optimize income in low-tax jurisdiction as well as reduce income in those high tax countries.

·       Correspondent Account: It is considered to be the very lifeblood for any international bank. You can hold money as well as carry out transactions through the facilities offered by a larger bank. If a Dominica bank, for example, is eager to hold US dollar accounts, then a USA correspondent banking partner will be desired. Having US Fedwire abilities, the US partner can perform the transactions in US dollars.

Getting to know the above components will allow you to set up an OFFSHORE BANK LICENSE without much difficulty.

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