As you may be aware, offshore banking brings many benefits and it is completely legal when done correctly (i.e. not dodging tax or money laundering). But what’s more useful is to know what are the best jurisdictions in which you can get a license for a start-up bank abroad. Now, you may think you are well informed on that, but your information may be a little outdated as some major changes happened in the last one year and the list of top offshore banking license jurisdictions has changed.
Not only can you get a license and a correspondent account with a reliable institution in Puerto Rico, but also you can do so at the cheapest rate compared to anywhere else (where it is worth starting an offshore bank). You are only required to have a capital of $550,000 in order to start the venture and pay just $5,000 annual fee. What is more, banks in Puerto Rico are not obliged to report back to the IRS their own affairs or the ones of their customers. Good enough reasons for Puerto Rico to come up first on the list of best offshore banking license jurisdictions.
In contrast to Puerto Rico, acquiring a banking license in Belize will cost you much more. If you just want to open a bank with an international license, you will need $1 million in the capital and if you decide to go for the full license, you must be ready to pay $3 million in the capital. Also, the process of license approval and issuing can take a long time, somewhere between 12 and 18 months. However, with all that said, we must point out the fact that Belize banks
have the highest capital ratio rates worldwide – around 20%. This is the very reason why banks in this jurisdiction are considered extremely safe for those who want to deposit their money.
Another jurisdiction where the required capital for issuing an offshore banking license is Dominica. You would only need $1 million to get licensed. The even better news is that in this country fresh applicants are actively sought, which means the application process is easy and quick. To top it all, Dominica is one of the most preferred destinations for offshore banking because it also claims at the top of the second passport industries list, meaning that many of the people who start a banking venture also purchase a second Dominican passport.
Similarly to Belize, Panama is an offshore banking jurisdiction where getting licensed does not come cheap and you can have two types of license – international and full. Although in the law we see figures much lower, the reality is you may need to have up to $24 million in capital to receive both licenses. That can be too much for many, which is why there’s also an another option – setting up a credit union. Basically this is an institution for savings and loans where every depositor is also a stakeholder. Setting up a licensed credit union will only cost you between $1 and $3 million.
The Cayman Islands are the most expensive jurisdiction to get a full offshore banking license. The fees paid to the government for issuing the license can hike up to over half a million dollars and another half dedicated to legal fees. Of course, there are many other costs you will have to cover until you get that license. Also the application processing time is not too short and extends to over 12 months. Now, these may seem as all negatives, but really, they are just preventing measures to ensure that the institution getting licensed will be safe for depositors, will not commit any fraudulent actions and will not go into bankruptcy easily. This is the very reason why so many people and businesses choose offshore banking exactly in the Cayman Islands. As statistics have it, there are more than 70,000 companies
registered there of which 350 are banks. This is a pretty big figure for a not so large piece of land.
Offshore banking options are unlimited and this article has presented only a few of the preferred jurisdictions for offshore banking licensing, which in the past year climbed to the top. They seem to be the best choices because of their cost efficiency, fairly easy application process or the security guaranteed to the start-up banks and their customers.
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Fulton Abraham Sanchez, the founder of FAS CPA & Consultants of Miami, FL, is a Certified Public Accountant specialized in Offshore Banking Consulting. You can email him to email@example.com.
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