Managed Banks & Banking Secrecy Laws Flashcards
What are managed banks
Banks that don’t meet the criteria to undertake banking business on own may be established as managed bank
Business is managed by another registered bank in offshore centre
Manager provides all necessary resources (staff, premises, info systems & controls) & operates those of behalf
Managed bank is registered person / must comply with regulatory framework & accountable for activities it undertakes
Regulators may apply same standards of FIT & PROPER tests
Outline advantages of operating as managed bank
+ Offshore presence / allows it to operate with oversight of manger / ensure laws & codes of practice maintained to protect public
+professional offshore service to customers / advantage of expertise, systems & controls
+reduce costs (low set up, admin burden)
+secrecy laws
+admin efficiencies (experienced staff, procedural framework & info systems) / don’t worry about staffing residency
+ability to become stand alone bank if meet criteria for licensing is met
Disadvantage
-third party arrangement / cannot deal with clients directly
Outline banking secrecy laws
Legal principle in some offshore centres under which banks aren’t allowed to provide authorities with info about customers
Switzerland provides long standing Practice for banking secrecy (provide fines of imprisionment If person deliberately discloses info entrusted in their capacity as employee of banks)
Legislation doesn’t protect criminals of serious offences (I.e tax evasion)
+OECD applied pressure to secrecy jurisdictions on exchange of info requirements / cause reputational damage
