Obtaining Banking License

Question 1

How to obtain a banking license

Answer 1

Banking is a regulated activity & requires banks to obtain license from regulator (FSC) in order to operate within jurisdiction

Requirements to obtain set out in legislation/ each offshore centre has own policy / criteria to determine if banks eligible to operate there

I.e JSY require bank to be member of top 500 banks worldwide

Offence to conduct without license

Regulators will undertake a FIT & PROPER assessment of applicants to decide whether license should be granted (CIF)

Regulators can impose conditions on certain banks to restrict activities

Question 2

Outline CIF test when obtaining a. banking license

Answer 2

Competence

• qualified & experienced staff
• reputation
• statute of applicant (capital adequacy & meet financial standards)
• internal controls (4 eyes maintain standards)
• polices & procedures comply with regulatory requirements (laws & codes of practice)

Integrity

• track record (risk profiling / no convictions)
• ownership transparency/ of reputable person
• displays interest in consumers needs

Financial Security

• sufficient capital funds
• professional indemnity
• supervisory reviews
• positive NAV
• systemic importance in home jurisdiction/ equivalent in terms of AML/CTF measures

Question 3

Outline ongoing regulation of offshore banks

Answer 3

Licensed banks subject to ongoing supervision by regulators

• on site examinations
• off site supervision (desk based analysis)
• requirement for bank to submit annual audited statements

Impose obligations;
-requirement principle person (directors) & key persons (AML officer) approved by regulator

-requirement to notify of significant events of changes

Regulators keen to demonstrate supervisory approach & performance is complying with standards

Some supervision can be undertaken by separate body that regulates other financial services (I.e insurance)

Question 4

Outline codes of practice

Answer 4

Regulators issue codes to establish sound principles & requirements for banking businesses

Operates with integrity
Due regard to interests of customers
Deal with authorities openly/ cooperatively
Transparent arrangements
Demonstrate existence of capital adequacy
& risk management systems (CDD & AML legislation)
Don’t make misleading, false of deceptive statements