The days where offshore jurisdictions issued bank licenses with minimum requirements are long gone. Now there are strict capitalization rules, due diligence procedures, and relevant experience requirements with some jurisdictions additionally requiring a local office and the use of local employees.
However, there are alternative financial structures that still offer a wide range of services such as: deposit taking, payment processing, investing, brokerage, and forex trading.
While there are a number of financial companies and a host of jurisdictions to chose from; we have come up with a shortened list that offer the best opportunities with the least amount of red-tape.
For electronic payment services, e-money wallet and currency licences:
For a financial licence dealing in services related to securities, forex brokering, and dealer services:
Offshore Financial Service Companies
Panama Financial Services Company
A Panama Financial Services Company is one of the most popular and one of the least expensive offshore financial services company in existence. A financial services company based in Panama requires a 50,000 USD paid-in capital, a small local physical office and a minimum of two employees - specifically a "cashier" and a qualified bookkeeper who acts as a local office manager.
The licence issuing process is relatively easy and straight forward to obtain but they are watchful that every company submits a financial report and will cancel the license if a company fails to comply.
Republic of Georgia Financial Company
Georgia offers a payment services and e-money licence granted by the Central Bank of Georgia within 30 to 45 days once a company has been formed. There is no paid in capital requirement and the running costs are low. Moreover, such companies enjoy a tax-free status on foreign derived income and the local banking options are high quality and quick and easy to open.
Georgia has never been on any offshore blacklist which makes opening a bank account in other jurisdictions a lot easier. It was also not required to join the OECD's Common Reporting Standard (CRS) initiative. This country has attracted a number of well known payment and e-money service providers and the lack of bureaucratic red-tape is a big draw, though to open a local bank account one must go in person. Our local law firm in Tlibisi offers office management services which an suit your needs
New Zealand Financial Company
A New Zealand Financial Services Company or what is called a Registered Financial Services Providers (FSP ) can offer banking, investment and brokerage services to both private individuals and corporations worldwide, with no limitations on the number of customers, amounts on deposit or number of currencies. New Zealand repealed its banking law in 1995 and did not replace it consequently there are very low barriers to entry in comparison to other jurisdictions.
Once upon a time these companies could simply operate as offshore companies with no special legal status, other than the freedom to offer such services but today the only viable option is to register onto New Zealand’s Financial Services Provider Registry. Although there is still no paid-in capital requirement for forex broker/dealing, custodial services, payment processing and e-money services, it does require a long review process by the New Zealand Financial Markets Authority. This process can easily take 9 months or more and so our recommendation now is to obtain the cheapest and fastest licence option offshore (currently Vanuatu) and then go through a process of "passporting" the licence into New Zealand through a special structure set up. This will make the review process go much faster and also provide you with a back up licence option as well as the ability to offer securities related business which otherwise requires special licencing in New Zealand.
New Zealand requires a local physical office operation and a local manager. But this is still the lowest cost option by far to establish a financial services operation in an advanced English speaking country at the top of almost all lists in regards to lack of corruption, respectability and lifestyle options.
Vanuatu Security Dealers Licence
Vanuatu offers a a licence for for e-money and payment services as well as for forex, securities and investment related business. A Securities Dealer Licence has a very wide definition and covers almost any type of financial service outside of a being a licenced bank or insurance company.
A Security Dealers Licence requires no paid in capital and with only a USD 2,000 government fee and no requirements to maintain a physical office in the jurisdiction. Bank accounts can be opened in Vanuatu though being in person generally is easier, however, we can provide consultation and support if you wish to set up a Vanuatu Bank Account.
Offshore Dealers and Brokerage Licence
An International Brokerage and Clearing House License allows the license holder to engage in activities such as:
- Brokering, issuing and underwriting of securities
- Asset management
- Transaction clearing
- Fund management
- Payment processing
- Currency trading
- Financial advisory
BELIZE BROKERAGE LICENCE
Belize offers one of the least expensive brokerage licences in the world. It requires a USD 100,000 paid in capital amount for a full securities or forex trading licence. Belize has no local office or local director requirement. Licence approval can take 6 months or more similar to most other jurisdictions such as BVI, Mauritius or Cyprus. Belize also offers a lower cost financial advisory licence which only requires a USD 25,000 paid in capital amount.
VANUATU BROKERAGE LICENCE
As mentioned above in the section on payment and e-money services, this full spectrum financial licence does not require any physical presence, local director or paid in capital can be obtained within 30 to 45 days after submission of all required documents. It is the only financial licence available anywhere that we are aware of that allows one to offer anything from securities and dealing and advisory services along with investment funds, issuing and underwriting your own securities offerings as well as payment and e-money services.
SWISS TRUST COMPANY
A Vintage Swiss Trust Company is an interesting non-regulated (or ‘self-regulated’ as the Swiss like to state) alternative to a bank and can perform many similar services so long as it does not refer to itself as a bank.Through a conversion process, an ordinary aged dormant Swiss shell company that once was in business is transformed into a credible looking trust and financial services company. The main selling points are age (up to 80 years!) and Switzerland.
In Swiss law there is no actual legal definition of a trust company and though the original company may have been in a completely unrelated business, this does not detract from how such a company may be skillfully used, capitalising on the aura that a Swiss financial entity can still project.
They can be moulded into a ‘flagship’ type of corporate entity and along with Swiss administration and banking can attract all sorts of business opportunities that might be much harder to come by. A local Swiss director and administration is required, although no special licencing is required for managing accounts of up to twenty third parties with licencing readily available for higher account volumes.
BRITISH VIRGIN ISLANDS (BVI) HEDGE FUND
A closed-ended fund is unregulated and not covered by the Mutual Funds Act in BVI and are often used as Hedge Funds, Private Equity Investment Companies, etc. The closed-end fund structure consists of a business company limited by shares.
A closed-end fund is different from an open-ended fund (mutual fund) in that investment units are redeemable at the discretion of the fund manager or in accordance with the terms agreed upon with the investors of the fund, rather than redeemable on demand as in the case of a Mutual Fund.
This means there only can be a fixed number of investment units for sale as with a Limited Partnership. Closed end funds are not subject to the license and supervisory requirements of the FSC.
You may not use the word ‘Fund’ or ‘Hedge Fund’ in the name. Main advantage of this option is a lower entry cost and unregulated status as compared to the typical mutual fund licence options available in BVI, as well as many other offshore jurisdictions. No local physical office or director required.
ST. LUCIA PRIVATE MUTUAL FUND
Of interest to many of our clients is the lightly regulated open-ended Offshore Private Fund option. Private Funds do not require a third-party administrator, like most Public and Professional funds. Most Private Mutual Funds are limited by the number of investor clients that can be inducted, with the case of St. Lucia the maximum number of fifty and a minimum required investment of US$100,000.
However, other newer legislation has been passed in St. Lucia, which is offering excellent value with a 100 maximum clients together with a minimum required investment of only US$50,000. In the lesser known mutual fund jurisdictions, such as St. Lucia, we are able to negotiate a very reasonable fixed fee arrangement that are not percentage based together with no local physical office or local director requirements.
SEYCHELLES SPECIAL LICENCE COMPANY (CSL)
The Seychelles CSL is a Seychelles domestic company is a tax resident of the Seychelles and may conduct business inside as well as outside of Seychelles. The Seychelles CSL benefits from only having to pay a 1.5% tax on worldwide income. The CSL has substantial appeal, especially for international companies as tax-efficient vehicle for permitted for the use as an intermediary holding company for intellectual property or services.
MAURITIUS GLOBAL BUSINESS LICENCE COMPANY (GBC-1)
A Global Business Company can be locally incorporated or registered as a branch of a foreign company. The Company may be migrated to another domicile yet continue to be a Mauritius GBC-1. The company is often used as a holding or investment company for the management and administration of global funds. A Mauritius GBC-1 can be a Protected Cell Company, a Limited Life Company or a Collective Investment Scheme.