How to buy and set up an Offshore Bank?
Setting up an offshore bank is no more an easy task. You may have managed to raise some capital from several sources and looking for an OFFSHORE BANK FOR SALE. Establishing one and making it operational is indeed a challenge for any outsider. You also need to know the involved cost and capital required to start one. It does take a good amount of time and more money to get hold of valid bank licenses these days. If you are serious about your venture and have viable business strategies and plans, take the help of a good consultant. They can provide proper and timely guidance, thereby overcoming challenges and obstacles.
Bank License
It represents the country’s regulatory approval where the bank is planned to be opened. Moreover, obtaining the license is an absolute must to set up a bank. However, it is considered to be just the first step in the entire process. It is not similar to operating a bank.
License for Offshore Bank In UAE Dubai should be specific to the group or person obtaining it. The country’s Central Bank authority is to ‘vet’ them and ensure they meet specific conditions. If you buy an existing license from a broker, you will require undergoing the approval procedure of the regulatory agency. Both the initial approval and transfer process takes a long time. Hence, trying to acquire an existing license will only incur more expenses.
The license being just another regulatory agency approval, you need to tackle the marketplace. Combined with it, you need to meet the requirements for anti-money laundering, profit, transaction volumes, capitalization, KYC, etc. You can achieve your set objectives and goals by identifying a strategic partner.
To purchase an already operational bank, you need to derive regulatory approvals about your ownership. In the meantime, the bank is free to continue its operation without any hindrance. But a hefty premium is to be paid comprising of 3-5 times the company’s book value. This again depends on a variety of factors.
Duration & Investment
Incorporating a new bank right from inception is likely to take about 6 months to 2 years, based on the jurisdiction. If you have low capital ($1 million) and want to BUY OFFSHORE BANK within six months’ time, then you can consider Dominica. But with such low capital, Dominica startups may also find it tough to partner with an international correspondent bank. This is to derive bank-to-bank services. You need to have ready access to correspondent services offered by some international bank.
A better low-end amount would be $3-5 million to consider OFFSHORE BANK FOR SALE. With this figure, you can consider other less expensive jurisdictions like Belize. If you can invest $10 million, then you can consider almost all Central American and Caribbean countries offering international banking. It also includes Puerto Rico due to its United States territory status. Thus getting access to U.S.-based correspondent banks, merchant card/credit card services, etc. is much easier.
Mexico leads among the Caribbean countries requiring an investment of just over $25. This amount is also suitable to open a bank in some quality Asian and European jurisdictions, including Switzerland.
Other non-monetary issues to consider
Establishment cost is likely to vary, depending on the person/group undertaking the task associated with several issues.
- The banking experience’ of the investor group is one such consideration to be taken into account. It is important to identify people to serve as board directors and officers for the application procedure. It also includes ongoing operations. There are some jurisdictions that are not that stringent concerning the banking background of the ownership group.
- Also should be considered the investor group’s nationality, fund source, background checks, etc.
- The decision to select a location also is influenced by double tax treaties to optimize tax efficiency. Offshore Bank In UAE Dubai and Puerto Rico will be feasible as they offer lucrative incentives to potential investors. For instance, the latter offers incentives, thereby reducing bank income taxation by about 4$. Thus, it is quite lucrative to investors when compared to other tax-haven jurisdictions.
- A business plan is the next issue to be addressed. The Central Bank will review the submitted business plan. Coming up with a high-quality plan will ensure more positive results, thereby saving money, time and energy. Hence, the business plan is better drafted by an experienced external service provider or an attorney. This will however add up to the establishment cost.
- There should also be in place AML (anti-money laundering) procedures and policies along with KYC (Customer) guidelines. For this, the prevailing best industry practices should be considered. It is crucial when trying to obtain foreign correspondent bank relationships.
- If your bank plans allow U.S. customers, then submission of GIIN (Global Intermediary Id. No.) is mandatory with the U.S. IRS. This is to comply with FATCA regulations. Otherwise, appropriate paperwork needs to be performed with FATCA. This way, the bank’s transactions are not likely to come under ‘backup withholding’ regulations. Non-compliant banks are to pay 35% tax of gross amount of wire transaction carried out via the U.S. Federal Reserve. It also includes other FATCA-compliant banks located outside the United States. When you BUY OFFSHORE BANK, you need to certify of not catering to U.S. customers. This is mandatory if you desire to avoid prevailing regulations or comply with the U.S. IRS.
Final steps
On selection of the jurisdiction, the ownership is to incorporate the bank with formal application submission to obtain a valid license. It should also accompany crucial documents. The bank has to follow-up as well as answer questions posed by the regulators. On getting satisfactory answers, the authorities will provide the license, thus completing the OFFSHORE BANK FOR SALE procedure.
Once the license is obtained, the next step is to open a local bank account to deposit the capital amount. Thus, the process to obtain an international correspondent relationship gets initiated. Your bank may offer a variety of services including cryptocurrency (blockchain), SWIFT, gold storage facilities, etc.
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