Setting up a Bank Offshore
Historical Background:
Setting up banks, especially offshore banks, was a simple task just 5 years ago. For instance, in the jurisdiction of Saint Kitts and Nevis, before the 2008 crisis, it was possible to open a bank for as little as $50,000. However, when the wave of liquidity from the US Federal Reserve hit the market, such schemes became dangerous, as they made it possible to create “carousel banks” to siphon off large volumes of funds quickly entering the market. For this reason, several measures were taken to close the possibility of quickly creating cheap banks.
Of course, the version given is only one of the existing ones, but it illustrates the quality of the changes that have occurred in the situation with the creation of new banking institutions. In practice, the reasons for the changes are not so important; the current situation and the possibilities for opening offshore banks are much more interesting.
Opening a Bank Today
Currently, the situation is such that obtaining a banking licence on pre-crisis terms is possible only in one or two jurisdictions. At the time of writing, these are Belize and Seychelles. The general conditions there are roughly the same:
1. $1-1.5 million deposit with the central bank
2. $300-700 thousand of certified equipment and software
3. Procedure duration about a year
4. “Total” verification of the origin of funds
In a few more jurisdictions, under the same conditions, it is possible to create a bank, provided that you already own another bank operating in the same state, and the old bank must become the insurer of the one being created.
Bank Incorporation Procedure
The procedures for opening banks differ in each jurisdiction. In this article, we will only give a general outline of a typical commercial bank engaged in acquiring payment cards:
How to Open Your Own Bank
At the first stage, it is necessary to make a fundamental decision: is it right to use such a tool as a bank, especially an offshore one, to solve existing problems? This requires research by specialists who have experience in solving such problems, as well as have sufficient knowledge and connections to obtain a quality answer. Our company’s employees are ready to carry out such work.
Upon completion of the research, it may turn out that, for example, an entire department in a bank of a former Soviet republic specializes in making “special” payments, and to hide the excessive number of returns and complaints from customers of card payments, it is enough to make an external processing centre, and the bank may well be a third-party one.
The second stage, if we confirm the need to create a banking institution, will be a cursory review of existing opportunities and features of various jurisdictions. As well as choosing a specific state to start the procedure, or a detailed study of its legislation “in depth.”
The third stage is either to start the procedure if we have already opened a bank in the selected state, or to send our employees to establish business contacts and issue powers of attorney, which will allow for remote management of the process in the future.
Banking schemes today
Unfortunately, today creating your own bank is no longer as cheap and easy as it was 5 years ago. Modern business schemes are becoming more and more complex, but we are always ready to work out the most unusual issues for you. Contact us. Alexei Zarin
Moscow, 2013