Banking Companies

Many off­shore bank­ing insti­tu­tions have been estab­lished in tax havens in recent years. Many of these insti­tu­tions are sub­sidiaries of major inter­na­tion­al banks. Such insti­tu­tions pay inter­est free of with­hold­ing tax and engage in inter­na­tion­al financ­ing from off­shore bases which are free from exchange con­trols. Such bank­ing insti­tu­tions and their asso­ci­at­ed trust com­pa­nies are able to pro­vide a wide range of finan­cial ser­vices to their inter­na­tion­al clien­tele. Offshore bank­ing insti­tu­tions are also used by the small­er busi­ness Organization and indeed in some cas­es by indi­vid­ual own­ers to act as off­shore cash man­age­ment centers.

In the past, cer­tain off­shore cen­ters such as Montserrat and Anguilla have lacked the super­vi­sion which should accom­pa­ny the set­ting up of small­er bank­ing insti­tu­tions. Indeed the British Government intro­duced a mora­to­ri­um on the set­ting up of bank­ing insti­tu­tions in its Caribbean depen­den­cies until such time as ade­quate leg­is­la­tion had been brought in and bank super­vi­sors appoint­ed. Of these juris­dic­tions one of the first to meet British Government require­ments was the Turks and Caicos Islands. Under its bank­ing regime two types of license are avail­able, name­ly, a nation­al and an over­seas, the lat­ter only per­mit­ting bank­ing activ­i­ties out­side the Islands. In either case a bank would have to main­tain a phys­i­cal or rep­re­sen­ta­tive pres­ence in the Islands. A com­bined license can be grant­ed. The man­age­ment of the pro­posed bank would be required to dis­play a sound knowl­edge of bank­ing with evi­dence of abil­i­ty and expe­ri­ence and no less than two direc­tors must be appoint­ed. In respect of those banks wish­ing to deal with the gen­er­al pub­lic with­out restric­tion, sub­stan­tial cap­i­tal resources would have to be demonstrated.

One juris­dic­tion which does per­mit the set­ting up of the small­er bank­ing insti­tu­tions, whilst at the same time pro­vid­ing a super­vi­so­ry regime, is the Republic of Vanuatu (for­mer­ly known as the New Hebrides). Another Pacific juris­dic­tion favored by small­er insti­tu­tions is Samoa.