In the early days of this blog, I wrote a couple of articles that continue to be some of the most read ones. Going back to them now, I notice that I have improved my blogging in the almost two years since then and that those articles are in fact quite poorly written, sometimes inaccurate, and in dire need of improvements.

So in the coming months, I will be revisiting and re-writing some old posts. We begin with How to Start an Offshore Company.

1. Company Form and Jurisdiction
2. Picking a Registered Agent or Trustee
3. Incorporating your Offshore Company
4. Record Keeping and Financial Statements

Company Form and Jurisdiction

These two go hand in hand, but I usually find it most valuable to determine company form first.

I am assuming that if you are reading this, you understand the concept of limited liability. If not, please make sure you do before continuing to read.

Company Form

The by far most common company form is one whose liability is limited by shares. The shares are not public (not traded on a stockmarket) and instead held privately, hence the term private limited company. These have different names and work slightly differently across the globe but are generally similar enough that they can all be grouped together, at least for this initial high-level approach.

Below are equivalent or close equivalent legal forms in various tax havens:

• Aktiegesellschaft (AG) – Switzerland, Liechtenstein, Luxembourg
• Delniška Družba (d.d.) – Slovenia
• Gesellschaft mit beschränkter Haftung (GmbH) – Switzerland, Liechtenstein, Luxembourg
• Naamloze Vennootschap (NV) – Curaçao
• Osaühing (OÜ) – Estonia
• Sabiedrība ar Ierobežotu Atbildību (SIA) – Latvia
• Sociedad Anónima (S.A.) or variations thereof in similar languages, i.e. Société Anonyme in French – Panama, Costa Rica, Monaco, Luxembourg, Lebanon
• Sendirian Berhad (Sdn. Bhd.) – Malaysia
• With Limited Liability (WLL) – Bahrain

The list above is imperfect because of multi-lingual countries but the point I’m trying to make here is that this very popular entity type has spread across the world. Often, these type of companies are called corporations but it’s beyond the scope of this blog to dive into the difference between company and corporation.

The (in)famous IBC – or International Business Company – which originate from a piece of legislation in the British Virgin Islands is for all intents and purposes a private limited company. Ownership of IBCs is determined by shares, which have share holders, who in turn appoint directors.

I could write dozens of paragraphs with buts and ifs and exceptions to the aforementioned, but they generally do not affect you or if they do, it’s something you should know already or will realize when doing your own in-depth research.

In 1977, some very clever people in Wyoming enacted a legislation which lead to the creation of the Limited Liability Company. The only bad thing about LLC is that the name makes it easy to confuse it with the previously discussed private limited companies.

What’s so clever about LLCs is that essentially are a hybrid between corporations and partnerships, in that they have limited liability but are not considered taxable entities. Instead, the members of the LLC are taxable and income is taxed as personal income. Some jurisdictions do consider LLCs taxable entities, though, such as the states of District of Columbia, but these are few and far between. A handful other jurisdictions charge a nominal franchise tax on LLCs.

LLCs do not have share holders and directors, and is therefore often not considered a corporation. Instead, they have members and – if they so chose – officers.

I won’t go into the details of LLC and comparing LLCs to corporations here. I’m saving that topic for another post.

LLCs have spread to other jurisdictions under various names.

• Limited Liability Company (LLC) – USA, Anguilla, Saint Kitts and Nevis, Belize, Cook Islands, Isle of Man, UAE
• Societate cu Răspundere Limitată (SRL) – Moldova, Romania
• Sociedad de Responsabilidad Limitada (SRL) – Panama, Costa Rica, Dominican Republic

Confusingly, some IBC jurisdictions permit companies registered as IBCs to use the suffix LLC in their company name, despite not actually being proper LLCs. This means that while it’s technically possible to form a company called Example Trading LLC as an IBC in the Seychelles, it is not a true LLC.

Then there are really only two popular options to consider:

• Société à Responsabilité Limitée (SàRL) – Monaco, Luxembourg, Lebanon
• Limited Liability Partnership (LLP) or Limited Partnership (LP) – United Kingdom, Mauritius, Singapore

SàRLs share similarities with LLCs in that they are largely hybrids between corporations and partnerships. They are however typically subject to corporate tax and have share holders.

LLP is a flagship in UK tax planning. They allow for a tax neutral pass-through entity to be formed in the highly reputable UK. The law has only been around since the year 2000 but has exploded in popularity.

There are a couple of company types remaining, none of which I find interesting or relevant enough to bring up here. Non-resident sole proprietorships, for example, make no sense.

Jurisdiction

Choosing jurisdiction for your offshore company is highly dependent on the company type you want.

Some things to consider when picking jurisdiction are:

• Does it have the company form I want?
• Is it a reputable jurisdiction? Does it matter to me?
• Has the jurisdiction signed any tax treaties that relevant to me?
• What is the corporate tax rate, if any?
• Are there requirements on resident directors, shareholders, or other role?
• What are the reporting requirements?

The first point assumes you have already decided on the right company form. If you have decided that an LLC is the best solution for you, your choices become drastically limited, whereas someone seeking a corporation structure will have nearly every jurisdiction in the world at their disposal.

Reputability is an abstract measurement of the international perception of a jurisdiction and companies from that jurisdiction. Here, I will refer you to another post: Assessing the Reputability of Offshore Jurisdictions, which also goes into why reputability matters. Of course, it doesn’t always matter.

I usually advocate transparency and consider tax treaties to be largely positive elements, but I’m well aware that many seek confidentiality with their offshore structures which often comes at the cost of reputability. Whatever your reason for wanting to find out about a jurisdiction’s tax treaties, OECD runs a website called the Exchange of Information Portal which lists jurisdiction’s TIEAs and DTAs. Although OECD does a good job keeping this website up-to-date, it doesn’t always have the very latest developments nor does it have all agreements available for download. You may want to visit the websites of relevant government authorities in the involved jurisdictions (usually the one you live in and the one you seek to incorporate in).

Although it might seem implied that tax rates of tax havens is zero, this isn’t always the case – not even for IBCs, with Barbados famously taxing its IBCs.

KPMG maintains a list of tax corporate rates around the world, but it’s missing a lot of jurisdictions and does not take into account territorial taxation. Deloitte publishes a good series of papers called Tax Highlights which go more in-depth into the basis of taxation and definitions of company residence. Many governments publish tax rates online.

A handful of countries have requirements on resident directors and shareholders. The perhaps most noteworthy example is Singapore, which requires at least one resident director. This drives up the costs of incorporating in Singapore significantly and is one reason many opt for Hong Kong instead.

Many jurisdictions also require a local secretary. This typically costs a lot less and is merely a ceremonial role. The secretary is essentially an extension of the registered agent.

Picking a Registered Agent or Trustee

A registered agent (RA) is a company or – rarely – a person, which is regulated by a jurisdiction’s financial services commission (or equivalent) and which is licensed to provide services, such as company management and incorporation.

The registered agent incorporated the company on your behalf and uses their own address as the company’s legally required registered office. This process is, on a high level, essentially the same across all jurisdictions. The only difference tends to be name. Registered office should not be confused with virtual office, which is never required to form a company.

However, nearly all offshore service providers (OSPs) out there are not licensed registered agents. They are merely intermediaries and instead are partnered with registered agents.

I personally prefer to go straight to the source and only work with licensed and regulated agents and trustees, but over the years I have had the pleasure of working with several very good intermediaries, for example Kaizen and HBM Group.

There is no easy way to pick a registered agent or OSP if you are starting from scratch. It comes down to researching them, speaking to them, and coming up with your own assessment.

Incorporating Your Offshore Company

So you have decided on company form, jurisdiction, and found a registered agent that you have a good feeling about? Excellent!

What happens next is that you place an order with the registered agent (or OSP). The order is received and you will be asked to make a payment. The most common form of payment is bank transfer. This is preferred because it is non-reversible (usually) and cheap. It also implies that you trust the agent to not run away with your money, hence the need for thorough research when choosing RA (registered agent).

Some registered agents offer other payment methods but if you go into this limiting yourself to only paying with for example PayPal, you will rule out nearly every registered agent.

Once payment is confirmed, you will be asked to send personal documentation to the RA. The documents required may vary, but typically come down to a copy of your passport and a copy of a proof of address (utility bill or similar). These usually do not have to be certified copies. Some RAs will ask for reference letter, police conduct report, or other documentation.

If your company will have multiple directors or share holders (or members or partners), documents will be requested for all persons involved. If any of the persons is a legal person (as opposed to a natural person), for example corporate directors or corporate shareholders, full due diligence will be required for the legal person.

You will be required to disclose your identity even if using nominees and, yes, your identity will be released if there is a request for exchange of information under an EOI treaty. See also The Real Deal About Nominees.

After you have sent everything to the RA, they will either send you proposed memorandum and articles of association (also called memorandum and articles of incorporation, and variations thereof). In most jurisdictions (especially IBC jurisdictions), these are usually extremely vague and state that your company may engage in any activities. In some jurisdictions, the articles of the company may limit its activities. This may also vary between RAs, with some requiring detailed articles. This is an often overlooked but extremely important aspect of forming a company. If you form a company whose articles state it will engage in the import and wholesale of car parts, and you suddenly decide to use the company to engage in an unrelated business activity, your company is no longer acting as intended and this can have implications with your bank and RA. They accepted you as a client based on what you told them. Changing this requires giving notice and updating the articles – unless your articles state you can do whatever you want.

If you are forming a company that requires a license to operate, as is common with FTZ (free trade zone) companies, your RA will apply for the license on your behalf.

During this whole process, there are usually a few documents going back and forth that you need to sign. A good RA will tell you about everything upfront and as far as possible accommodate any request to consolidate the paperwork into large batches instead of little bits here and there.

The turnaround for incorporation varies between jurisdictions. Your RA should be able to give you an estimate but it’s not always up to them. Sometimes the company registry in the jurisdictions are overworked. I have seen companies formed same day in some cases and after several weeks in other, but on average it’s just a couple of days to a week. You can sometimes pay extra for express formation, but that should hopefully not be necessary.

And, just like that, you have formed an offshore company.

Bookkeeping and Financial Statements

No matter where you incorporate your offshore company today (almost), there will be some level of record keeping required.

What records need to be kept varies greatly. As a heuristic, the more reputable a jurisdiction is the more detailed record keeping is required.

But this really isn’t even nearly as bad as many would-be (wannabe?) entrepreneurs make it sound. I understand you want to get started with your business, but it is beneficial to do so responsibly.

For a long time, IBCs were exempt from bookkeeping (implied or explicitly so). They could operate completely without any accounting required and no need to prepare reports. The OECD and other international organizations clamped down on this and nowadays there are some degree of bookkeeping requirements in all jurisdictions. Unfortunately, the myth that IBCs do not need to keep records persists. Yes, there are exceptions.

However, IBC jurisdictions are generally content with companies to prepare a financial statement at the end of each financial year which is supposed to be detailed enough to accurately reflect the company’s financial standings. These need not be filed with the government but the RA must know where the statements are located. The company registry may request to see the financial statement of a company and the RA must be able to produce a copy in a timely manner. If the company registry is not satisfied with the financial statement, they can request to see your company records.

This annual financial statement should be backed up by duly kept records. In reality, the risks associated with not doing so are relatively low for now but this will likely change in the coming years.

I don’t really see any good reason to not keep records of even the smallest offshore company. In fact, the smaller the company the cheaper/easier it is.

You can choose to either do it yourself or outsource it. In some cases, outsourcing is the only option since the records must be kept in the local language.

Consider that proper accounting is often required to benefit from territorial taxation, as the tax authority may require proof that you do not trade domestically and hence can be exempt from tax.

Most RAs are happy to provide record keeping services and help you with all the annual government filing. Make sure that you consider this cost when assessing the costs of forming your company.

Time to spice things up a little. Today, we’ll take a look at Lebanon, its full Arabic name (الجمهورية اللبنانية‎) literally meaning the Lebanese Republic.

Hated and loved for a banking secrecy so strict it makes Swiss bankers blush, its quasi-tax-haven status, and the tolerance for Hezbollah. This beautiful country is full of sweet delights.

This is being written at a classical Beirut café under a parasol hiding from the scorching autumn sun, armed with a tourist brochure I picked up from a nearby tourist information booth to jog my memory on the intricate history of Lebanon.

But, where do we begin?

History

The brochure begins Lebanon’s rich history with the Phoenicians. This is a common starting point but it’s worth noting that Lebanon has been settled since long before the Antiquity, tens probably even hundreds of thousands of years ago. There are traces of early humans and even neanderthals treading across Lebanon, which then looked markedly differently with far more vegetation and forest than presently.

Before the Phoenician civilization grew, there was the Canaanite period. Borders, if they existed, were nothing like today. Tribes, kingdoms, and sultanates rose and fell.

Enter the Phoenicians, sometime around 1200 BC. Setting up ports across the Mediterranean, the Phoenicians were some of the best seafaring traders in the region. Phoenician settlements spanned from Lebanon via Cyprus across Malta, where they left a mark in history books, all the way to Gibraltar.

With the rise of the Persian empire came the fall of the Phoenicians. The Persians held Lebanon until Alexander the Great in 332 conquered Tyre (Tyros) on the Mediterranean coast.

After the death of Alexander the Great, the Seleucid Empire took over Lebanon. They held it until the Roman Empire rose to power in the region in the last century BC. Christianity spread in the first century AD. When the Western Roman Empire fell, Lebanon became a part of the Byzantine empire.

In the 7th century, the Umayyad caliphate conquered Syria and much of the surrounding region, including Lebanon. Islam spread across the region. Around this time, the Druze faith also appeared.

My brochure doesn’t mention much about the crusades but being located near or between Syria and Palestine (the Levant) Lebanon played an important role is several of them. However, Muslim rule was re-established in the 13th century with the Mamluks.

The Mamluks held Lebanon for some 200 years, when they were ousted by Ottomans. Centuries of relative stability followed, during which Lebanon was ruled as a by the disputed the Maan rules Fakhreddine I. From The 1600s to the mid-1800s, Lebanon was ruled by the Shihabs.

Ottoman and British influenced civil unrest which led to a revolt and the upheaval of the Shihab rule. By 1860, a sectarian war between Christians and Druze broke out during which some 20,000 Christians were massacred. Large Druze and Muslim casualties also occurred but are not well documented. The conflict ended largely thanks to French intervention, under its role as proctor of Christians in the Ottoman Empire following a 1523 treaty.

The final decades of the 19th century saw relative peace and the relations between the three main religious groups (Christians, Muslims, and Druze) focused on cultural and economic growth.

Beirut was an important city of culture in the first world war. At the end of the war which saw the fall of the Ottoman Empire, the League of Nations decided that what is modern-day Lebanon should be under French control, as a separate entity from Ottoman Syria. It was during this time that Islam grew into a dominant position in Lebanon following large movements of populations in the region.

In 1943, in the midst of German occupation of France in the second world war, Lebanon gained independence.

The immediate post-war period was a time of great prosperity for Lebanon, with Beirut earning the reputation as Paris of the Middle East.

The first signs of unrest started in 1958 when an uprising required American assistance to be quelled. This led to a regime change but stability did not last long.

In 1966, one of the world’s worst then (and until today) bank collapses occurred. Much can be said about the Banque Intra affair. The most honest assessment is that details remain unclear to this day. The bank was founded in 1951 by Yousef Beidas and in the 15 years leading up to its collapse, the bank grew rapidly. Mr. Beidas had co-written the Lebanese banking legislation (or, rather, lack thereof). In 1956, he helped pen the infamous Lebanese banking secrecy law (more on that later).

Intra Bank became a poster child for the rapid economic growth in Lebanon and regional oil export. The bank opened branches across the world. It operated under many different names to skirt regulations and inspections. Remember, this was a time when due diligence and KYC policies were nothing like today and the bank was headquartered in a jurisdiction which then effectively lacked a banking legislation.

On October 14, 1966, Banque Intra stopped payments. The bank had been rumoured to be in great financial difficulty and as it held some 10 to 15% of all deposits in Lebanon, its collapse was a devastating blow to Lebanon and the entire region.

The actions from the Lebanese government lead some to believe that the problems were exacerbated to one degree or another by Mr. Beidas being a Palestinian and sectarian tensions with officials. When the damage of Banque Intra’s collapse became clear, various forms of regulations were rapidly put in place but it was not enough to quickly mend the reputational damage.

Lebanon recovered, though, and in the 1970s when OPEC enacted oil embargoes, it was a well positioned financial center. Some of the regulations enacted in the period 1966 – 1970 had successfully created a type of banking sector within a banking sector which made Lebanon domestically volatile in an already volatile region, yet it remained a strong player in international finance.

All of this went on at the same time as the Lebanese civil war raged on, from 1975 on and off to 1990. The causes of this civil war are complicated (more so than many other civil wars) but were ultimately down to religious and sectarian tensions, demographic changes, and domestic economic uncertainty. In 1982, Israel invaded Lebanon in retaliation of an attempted assassination of its ambassador in the UK.

Noteworthy, the Lebanese banks remained open throughout the war by paying off militias and bullet-proofing its offices. No other country’s banks have been through as much political and social turmoil and come out so strong as in Lebanon.

It was during the Lebanese civil war that Hezbollah cemented itself into the Lebanese society as a political party and military organization (classified as a terrorist organization by many goverments).

The two decades following the end of the civil war saw cautious group and continued internal conflict, as well as skirmishes with Syria on both a military and political level. By 2005, Syria had removed its troops from Lebanon.

In 2006, Israel invaded Lebanon again to engage Hezbollah. War was never declared on Lebanon and the operation remains highly controversial. The Lebanese army did not fire upon Israeli troops but warned it would not tolerate troops advancing too far north.

Such is the complicated relationship between Lebanon, Hezbollah, and Israel.

Lebanon has been mostly stable since then. Its economy continues to grow although the Syrian civil war has caused some slowdown. Even so, Lebanon is poised to become one of the highest earning countries in the region within the coming years.

Overview Data

Map via Wikipedia.

Lebanon incorporation

Lebanon has a reasonably well-developed corporate sector. A Lebanese company is subject to 15% corporate tax on taxable income, but Lebanon applies a type of territorial taxation that is similar (but not equal) to Hong Kong, whereby foreign-sourced income may be exempt from tax.

There are a number of caveats and conditions that are unfortunately poorly documented in English or even French. Information is mostly limited to Arabic. There are virtually no OSPs offering Lebanon incorporation and the ones that do charge an arm and a leg for it. The best way to form a Lebanese company is through a locally-present law or accounting firm.

Lebanon is generally quite demanding to incorporate in as a non-resident foreigner. Entrepreneurs and investors who are interested in forming a company in the Middle East are more likely to find UAE (Dubai, RAK, Abu Dhabi) and Bahrain far more easy-going alternatives.

Mobile bearer shares are permitted.

Banking in Lebanon

Lebanon was for a long time the financial center of the region, sitting strategically between Europe and the Middle East. Following its civil war, Lebanon has lost much of its former glory – but it’s managed to keep all of the charm.

Many readers may not have been familiar with Lebanon in the offshore sector at all prior to reading this, yet there are billions of dollars of foreign money in Lebanon — that’s how good they are.

In my post Best Offshore Banks 2013, I listed a number of Lebanese banks.  I could have added several more. Banking is something the Lebanese do very well. (Spoiler alert: there will be Lebanese bank in this year’s edition, too.)

What does that mean and what makes it so good?

Largely thanks to regulations enforced in the Banque Intra (Intra Bank) affair (see History above), banks of Lebanon are generally financially sound. While most of the rest of world did not realize this until the Basel rules came out after 2010, Lebanon has been doing it since the 1960s. Uniquely, it has a banking sector strong enough to have survived multiple wars.

Internet banking facilities are usually more advanced than those of other banks in the region and even many Western banks. Customer service, sales staff, and account managers are almost always available in Arabic, French, and English with many other languages being covered. Fees are relatively low. Lebanon uses IBAN for international transfers with other IBAN users, but it is not a SEPA member.

Non-resident business banking for smaller businesses is rare in Lebanon. Unless you are engaged in the local Lebanese market or have regional ties, you will most likely not be interesting to Lebanese banks unless you have a turnover of a couple of millions. A European resident with a small offshore company performing web design services globally is not going to be attractive to a Lebanese bank. There are as always exceptions to this but don’t hold your breath.

Instead, private banking is the strength of Lebanon’s banking sector. Some of the world’s finest private banking is available here. The banks take excellent care of your money and in my experience the returns are some of the highest in the private banking sector. Risk profiles are highly individualized based on the client’s goals, capital needs, ethical concerns, and risk.

Minimum deposit requirements vary but it will be hard to find a bank willing to accept a non-resident foreigner for under 100,000 USD/EUR, with most banks requiring 500,000 or several millions.

Numbered accounts and pseudonym accounts are available and frequently used. There are no restrictions on domestic bank transfers to and from such accounts, but international bank transfers are (usually) not possible directly to and from the accounts. International wire transfers to and from Lebanese numbered accounts are instead performed by having a second bank account opened in the name of a bearer shares company, whose true legal name appears in the transfers.

It should be assumed that a visit to Lebanon is required to open a corporate bank account. Wealth management is much more lenient.

Noteworthy Banks

There are as of writing 72 banks licensed in Lebanon. Below are banks I consider noteworthy, but by no means have I had the opportunity to work with all 72 banks.

• Bank of Beirut
• BankMed
• Banque Audi
• Banque de Crédit National (BCN)
• Banque Libano-Française (BLF)
• BBAC
• BLC, parent bank of USB Bank
• BML
• BLOM Bank
• Byblos Bank
• Crèdit Libanais
• Federal Bank of Lebanon (FBL), parent bank of FBME
• FFA Private Bank
• Fransa Bank
• MEAB Bank
• NECB Bank

Lebanese Banking Secrecy

The extent to Lebanon’s banking secrecy is highly controversial. The Lebanese banking secrecy law (download from Banque du Liban website) effectively means that outside of money laundering, banks in Lebanon cannot freeze assets or disclose information without consent from the account holder.

Lebanon cannot comply with requests for information for tax purposes and is not interested in doing so. The sole exception to this is FATCA. Lebanese banks are still open to US persons but they will make US persons sign a document to wave banking secrecy, thus complying with FATCA without affecting its long-standing tradition of banking secrecy. Other requests for information are routinely turned down.

Will this change? Probably not as much as one might think. OECD remains very critical of Lebanon but Lebanon is not concerned with tax matters (other than FATCA). It is mostly compliant with the FATF 40+9 recommendations. In 2002, it was removed from FATF’s list of uncooperative jurisdictions. As of 2001 and 2003 respectively, money laundering and the financing of terrorism are criminal activities in Lebanon.

Living in Lebanon

Personal taxation in Lebanon is low to medium high, with personal income tax being a progressive rate of 4% to 21%. Capital gains and sales tax both stand at 10%. Inheritance tax is tiered based on proximity to the deceased with rates going from 12% to 45%.

Although residence permits can be obtained relatively easily, residing in Lebanon is as such rarely done for tax reasons alone. However, the capital city of Beirut has a fairly big expat community of workers from all over the world and it’s a quickly growing tourist spot. It’s easy to get comfortable in Beirut. It has the best nightlife in the Middle East and – some would argue – the best cuisine as well.

While Beirut is typically quite safe as of late, the country as a whole has volatile neighbours, with Syria in the north and Israel in the south. There are parts of Beirut a foreigner wouldn’t want to spend too much time in, especially in the Hezbollah-controlled neighbourhoods.

Final words

Something I was told on one of my earliest visits to Lebanon is that as an offshore financial center, Lebanon is best enjoyed from a distance. And I very much agree.

• OECD Peer Review of Lebanon (also has a list of TIEA and DTA)
• Financial Secrecy Index Lebanon
• FATF documents on Lebanon
• MENAFATF documents on Lebanon

Click here to see other posts in the Jurisdiction Spotlight series.

Has it been another year already? It sure looks like it.

I have pondered ways to approach this in the best way possible. In previous years, I have almost exclusively listed banks that stood out during the year but I think that might not be the optimal approach. A list of the best banks should surely include banks with which I, my clients, and my businesses bank with and which are such a seamless yet crucial part of the business that we couldn’t do without them but they provide such solid services we hardly notice that they are there.

I am therefore splitting this year into two categories:

• Top Offshore Banks – this is the normal list.
• Honourable Mentions – banks which do not qualify as the one of the top offshore banks in the world, but which I find worth mentioning here anyway for standing out in a positive light.

Both lists are alphabetical and not a ranking.

The first category contains 30 banks in over 40 jurisdictions. The honourable mentions cover 10 banks spanning 18 jurisdictions.

So grab your atlas and let’s get to it.

And as always, this is not a recommendation in any shape or form. You mileage may and very likely will vary.

Top Offshore Banks

These are the in my personal opinion the 30 best offshore banks:

• Abu Dhabi Commercial Bank
• Arab Bank
• Banca Privada d’Andorra
• Bank Muscat
• Bank of Tokyo-Mitsubishi UFJ
• Bank of Valletta
• Banque Audi
• Banque de Luxembourg
• Butterfield Bank
• Byblos Bank
• Citibank
• Crèdit Andorrà
• DBS
• Finansbank
• First Caribbean
• Garanti Bank
• HSBC
• Jyske Bank
• LGT
• National Bank of Abu Dhabi
• OCBC
• Qatar National Bank
• SBM
• SEB
• Standard Bank
• Standard Chartered
• Tai Fung Bank
• UBS
• UOB
• VP Bank

Jurisdictions mentioned in each bank’s segment is the jurisdictions with which I have experience with the bank.

Abu Dhabi Commercial Bank (ABCB)

• Established: 1985.
• Jurisdictions: UAE, Abu Dhabi.
• Minimum deposit/balance: 10,000 AED (100,000 AED recommended).
• Personal banking: Residents only.
• Commercial banking: Local or regional companies strongly preferred.
• Private banking: Weak.
• Remote account opening: Almost never.
• Mobile app: iOS, Android, Blackberry.
• Cards: Basic coverage, AED only.
• Website: http://www.adcb.com/

A great bank that acts as a seamless business partner to many companies in Abu Dhabi and the UAE as a whole. Their only weakness is the lacking private banking. While they do offer asset management, I prefer National Bank of Abu Dhabi (NBAD) for that.

Strong mobile and internet banking.

Particular commendation for some of the best customer service I have seen as a commercial banking customer anywhere in the world.

Free zone companies are accepted but at higher minimum deposits and different fee schedules.

Arab Bank

• Established: 1930.
• Jurisdictions: Jordan, Lebanon, UAE, Bahrain, Qatar, Morocco
• Minimum deposit/balance: Variable but 5 – 10,000 USD recommended.
• Personal banking: Regional residents only, but is OK with cross-border.
• Commercial banking: Local or regional companies strongly preferred.
• Private banking: Weak.
• Remote account opening: Almost never.
• Mobile app: iOS, Android, Windows.
• Cards: Basic coverage, local currencies only.
• Website: http://www.arabbank.com/

Arab Bank is headquartered in the stable and western-allied Jordan and is present throughout most of the Arab world and in many other places. Account opening is generally quite straightforward and can be done cross-border.

Another thing that stands out with Arab Bank is how easy it is to open accounts in different Arabic currencies.

Good mobile and internet banking, although internet banking is starting to look and feel aged.

Banca Privada d’Andorra (BPA)

• Established: 1957.
• Jurisdictions: Andorra, Panama
• Minimum deposit/balance: Negotiable, but 100 – 500,000 EUR recommended.
• Personal banking: Residents only.
• Commercial banking: Yes, international.
• Private banking: Strong.
• Remote account opening: Almost never.
• Mobile app: No.
• Cards: Credit cards, different currencies supported.
• Website: https://www.bpa.ad/eng

Banca Privada d’Andorra continues to impress. Despite economic turmoil in Europe, this year has seen excellent growth across the board.

BPA is one of the best private banks in the world right now. It is an experience that starts from the moment you walk into one of their sleek jet black branches in Andorra. It might feel intimidating at first but you are greeted and treated very warmly by the staff.

Quite attractive insurance products as well.

Bank Audi

• Established: 1830.
• Jurisdictions: Lebanon.
• Minimum deposit/balance: None, but 10 million USD expected for private banking.
• Personal banking: Not a big focus for non-residents.
• Commercial banking: Local or regional connection preferred.
• Private banking: Strong.
• Remote account opening: For private banking only.
• Mobile app: iOS, Android.
• Cards: Full coverage, including very high-end cards and coverage of LBP, USD, and EUR currencies.
• Website: http://www.bankaudi.com.lb/ and http://www.bankaudipb.com/

Whether you are looking for a bank to fly a private jet to your location and pick up a suitcase of cash (yes, for real) or just need someone to manage your funds, Bank Audi has you covered.

Excellent card services, possibly the best in Lebanon.

As a private bank, Bank Audi has delivered impressive results consistently for decades.

Bank Muscat

• Established: 1982.
• Jurisdictions: Oman.
• Minimum deposit/balance: Negotiable, but 100 – 500,000 EUR recommended.
• Personal banking: Residents only.
• Commercial banking: Local and regional companies preferred.
• Private banking: No.
• Remote account opening: Almost never.
• Mobile app: iOS, Android, Blackberry.
• Cards: Full coverage, local currency only.
• Website: http://www.bankmuscat.com/

Bank Muscat is in this writer’s mind Oman’s finest banking institution; an opinion shared with many: The bank is continuously receiving awards for its high quality services.

Recognizing that Oman in and of itself is not a major financial center, the bank accepts most regional companies and will even entertain non-regional companies. IBCs are accepted from time to time but it is not standard operating procedure. Account opening is a quick process if you go through pre-approval via email first.

Internet banking is in dire need of a facelift.

Bank of Tokyo-Mitsubishi UFJ (BTMU or MUFG)

• Established: 1919.
• Jurisdictions: Japan, Hong Kong, Malaysia/Labuan, Myanmar, China, UAE, Qatar, Bahrain.
• Minimum deposit/balance: None but 1,000,000 USD turnover expected for companies.
• Personal banking: Not a big focus.
• Commercial banking: Yes, international. Offshore companies are accepted. Shipping and trade industries preferred.
• Private banking: No.
• Remote account opening: Almost never.
• Mobile app: No.
• Cards: Full coverage. All sorts of currencies can be arranged.
• Website: http://www.bk.mufg.jp/global/

This is a banking giant in the shipping and trade (import/export) business. It is also the biggest bank in Japan, despite not being a significant consumer bank.

Letters of credit and moving money across the world and across currencies at attractive, negotiable foreign exchange rates are why it is one of the biggest banks in the sectors it operates in.

This is not a good bank for a small-time freelancer, consultant, or ecommerce operator. But it can be an invaluable banking partner for larger-scale operations. Many have been the times when BTMU has been the saving grace to get shipments released or allowing cargo ships to dock in risky harbours.

Bank of Valletta (BOV)

• Established: 1974.
• Jurisdictions: Malta.
• Minimum deposit/balance: 0 to 2,000 EUR.
• Personal banking: Yes, including non-residents.
• Commercial banking: Yes.
• Private banking: No.
• Remote account opening: Often but lately an intermediary is required.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: https://www.bov.com/

While accepting of any kind of business, BOV is the go-to bank for gambling and financial services providers in Malta. The bank is also known to take on offshore companies (including IBCs) although on a strict individual basis.

The bank has won multiple awards for its technical service offering with some of the best internet and mobile banking in the world. BOV’s outstanding achievements here have begun to diminish somewhat, but only because banks in general have finally started catching up.

Banque de Luxembourg

• Established: 1920.
• Jurisdictions: Luxembourg.
• Minimum deposit/balance: Negotiable, 100 – 500,000 EUR recommended.
• Personal banking: Not a big focus.
• Commercial banking: European companies preferred but will consider any type of client.
• Private banking: Strong.
• Remote account opening: Almost never.
• Mobile app: iOS, Android.
• Cards: High-end credit cards only.
• Website: http://www.banquedeluxembourg.com/

Banque de Luxembourg is a subsidiary of the French bank Crédit Mutuel-CIC, although it traces its roots far further back in time than its parent.

The bank is an investment and asset management bank and it does so very well. They will entertain applications from most types of clients, ranging from companies to trusts to foundations to private individuals. No strict minimum deposit exists and I know people who started banking with Banque de Luxembourg for under 10,000 EUR but decisions are on a case-by-case basis.

Good internet and mobile banking.

Butterfield Bank

• Established: 1858.
• Jurisdictions: Bermuda, Bahamas, Cayman Islands, Guernsey, UK.
• Minimum deposit/balance: 5,000 BMD/USD/GBP for business banking, 250 – 500,000 BMD/USD/GBP for private banking.
• Personal banking: Residents only.
• Commercial banking: Yes, international.
• Private banking: Quite strong.
• Remote account opening: In most cases.
• Mobile app: iOS, Android.
• Cards: Full coverage, available in USD and GBP.
• Website: http://www.butterfieldgroup.com/

All things considered, the finest bank in the Caribbean and Bermuda. 2009 to 2010 were rough years for the bank, but they bounced back to profits by the following year. Although the share price took a massive dip, but the Butterfield signature quality was never compromised.

Card services are some of the best in the region, with two airline partnerships being available (AAirways and British Airways).

Internet banking is strong but the mobile banking app, although light-years ahead of other banks in Bermuda and the Caribbean, leaves a lot to be desired.

Byblos Bank (BYB)

• Established: 1950.
• Jurisdictions: Lebanon, Cyprus.
• Minimum deposit/balance: None but 250,000 USD turnover expected for companies.
• Personal banking: Residents preferred.
• Commercial banking: Local and regional companies preferred, company should ideally have been established for a couple of years. Start-ups are heavily scrutinized.
• Private banking: No.
• Remote account opening: Almost never.
• Mobile app: iOS, Android.
• Cards: Full coverage (including prepaid cards), local currency, EUR, and USD supported.
• Website: http://www.byblosbank.com/

Byblos Bank is one of Lebanon’s many excellent banks. What sets Byblos Bank apart from many others is its broad range of sophisticated services primarily in the commercial banking sector but also for cards. Lebanon has a highly developed banking sector and banks are expected to live up to certain standards, which Byblos Bank does and exceeds.

Accounts are opened in LBP, EUR, and USD by default. It’s quite easy to add major international currencies and some local currencies in Middle East and Africa.

Citibank

• Established: 1812.
• Jurisdictions: Hong Kong, Singapore, Malaysia/Labuan, UK, Panama, Costa Rica, China.
• Minimum deposit/balance: None or low.
• Personal banking: Residents generally preferred.
• Commercial banking: Yes, international.
• Private banking: OK.
• Remote account opening: Rarely but permits cross-border account opening. Varies between locations.
• Mobile app: iOS, Android.
• Cards: Full coverage. Different currencies permitted.
• Website: http://www.citibank.com/ + Local variations

Yes, Citibank is an ultimately US-controlled bank. Yes, in an extreme situation, US authorities can probably extract information from any Citibank subsidiary. But none of that stops it from being one of the greatest banking institutions out there in the world today.

Wealth management is something Citibank has always tried to offer but it has never reached quite the level of the Swiss, Liechtenstein, and Lebanese grand masters.

Customer service varies greatly between locations and can in some cases be problematic for personal banking. Commercial customer service, especially for international businesses, is very good.

Mobile and internet banking are indications of a bank that has the resources to invest heavily in user experience. Citibank joins the likes of UBS and SEB in how well they do digital banking.

Crèdit Andorrà

• Established: 1949.
• Jurisdictions: Andorra, Panama.
• Minimum deposit/balance: None or low, 100,000 EUR for private banking.
• Personal banking: Yes, international.
• Commercial banking: Yes, international.
• Private banking: Strong.
• Remote account opening: Rarely.
• Mobile app: iOS, Android.
• Cards: Full coverage, including virtual cards.
• Website: http://www.creditandorragroup.ad/

The bank has improved the procedure for opening accounts for foreign companies. What used to take weeks is now often shortened down to a single week or in some cases faster.

Offshore companies are welcome but IBCs are as always treated with extra caution. Companies should ideally be established for two years already and have a turnover of 1 million EUR, unless they can deposit around 100,000 EUR and set aside for wealth management.

Internet banking is starting to look and feel dated and clunky. Likewise for the mobile app. If nothing changes in the next one or two years, this may become a problem and affect how much business I direct to this otherwise superb bank.

DBS Bank

• Established: 1968.
• Jurisdictions: Singapore, Hong Kong, Malaysia/Labuan, Taiwan.
• Minimum deposit/balance: Depends on account, from 10,000 to 100,000 SGD.
• Personal banking: Yes, some international.
• Commercial banking: Yes, some international.
• Private banking: OK.
• Remote account opening: Rarely.
• Mobile app: iOS, Android.
• Cards: Full coverage, excellent variation. Local currencies only.
• Website: http://www.dbs.com/

DBS is a deeply integrated part of many businesses, taking care of everything from cash flow to credits and lending to payroll activities. The bank does all of these services without a hitch. A year can go by without me seeing DBS more than once or twice and then only in the form of holiday greetings and changes in terms or pricing.

Cross-border account opening is a cinch as is moving currencies. Strong coverage of Asian currencies with competitive FX rates.

DBS’ internet and mobile banking facilities function very well, but pale in comparison to OCBC.

Finansbank

• Established: 1987.
• Jurisdictions: Turkey.
• Minimum deposit/balance: None.
• Personal banking: Yes, some international.
• Commercial banking: Yes, some international.
• Private banking: OK.
• Remote account opening: Turkish tax ID required.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: http://www.finansbank.com.tr/

Banking in Turkey in general is very exciting. There are many similarities with Lebanon in that the population is very bank savvy and have high expectation on their banks, which has led to a banking sector that is sophisticated enough to rival even Europe.

With very robust mobile and internet banking (if a bit cluttered), Finansbank is one such bank.

Not the most internationally-focused of the Turkish banks, with much of their website and other information lacking English translation. Internet banking is available in English, though.

FirstCaribbean International Bank (CIBC FirstCaribbean International Bank, CIBCFCIB)

• Established: 2002 (from a merger by Barclays and CIBC).
• Jurisdictions: Anguilla, Antigua and Barbuda, Bahamas, Barbados, British Virgin Islands, Cayman Islands, Turks and Caicos Islands.
• Minimum deposit/balance: 2,000 USD usually.
• Personal banking: Yes, some international.
• Commercial banking: Yes, international.
• Private banking: They try.
• Remote account opening: Yes, will sometimes insist on an intermediary.
• Mobile app: No.
• Cards: Full coverage. USD only.
• Website: http://www.cibcfcib.com/

This is a major bank with affiliate marketers. Acceptance policies vary between jurisdictions with Bahamas generally being the most permissive.

The bank stands out for its attractive range of services and cards, coupled with good customer service. This is very clearly a bank with heritage of customer service, unlike nearly all but three other banks in the Caribbean.

Internet banking is stale but fully functional. A facelift and tweaks to the user experience would be welcome.

It’s 2014 (2015 as of publishing) and this is a transactional bank, making the lack of a mobile app quite surprising. Hopefully this is something the bank will sort out in the near future.

Garanti Bank

• Established: 1946.
• Jurisdictions: Turkey.
• Minimum deposit/balance: None.
• Personal banking: Yes, international.
• Commercial banking: Yes, international.
• Private banking: No.
• Remote account opening: Turkish tax ID required, which the bank sometimes can help arrange remotely.
• Mobile app: Web [link].
• Cards: Full coverage.
• Website: http://www.garanti.com.tr/

Garanti Bank is a very popular with non-residents for its eagerness to work with foreigners, at least those from wealthier nations. Account opening usually only takes a few minutes once a Turkish tax ID has been required, or a couple of days if the bank helps you get one.

Non-resident companies are also welcome. Noteworthy, the bank has been known to take on companies from jurisdictions which many banks shy away from (Vanuatu, Marshall Islands, Liberia) following a thorough vetting process.

HSBC

• Established: 1865.
• Jurisdictions: Hong Kong, Singapore, Taiwan, Brunei, Malaysia/Labuan, Panama, Bermuda, Mauritius.
• Minimum deposit/balance: None.
• Personal banking: Yes, varies between locations.
• Commercial banking: Yes, international.
• Private banking: Quite strong.
• Remote account opening: Rarely, but permits cross-border.
• Mobile app: iOS, Android, Blackberry, Windows.
• Cards: Full coverage. Multiple currencies supported.
• Website: http://www.hsbc.com/

HSBC, more so than the other two international giants listed here (Citibank and Standard Chartered), varies enormously from location to location. HSBC Malta, for example, is one of the worst banks I have ever had the bad fortune to work with whereas HSBC across most of Asia and Latin America is amazing.

Recently, HSBC Hong Kong has turned very stale when it comes to opening new accounts for businesses. It’s a double-edged sword. Account opening is now simpler and quicker than ever, but it also leaves little room for companies that deviate slightly from the norm.

As a premier or commercial banking customer, it is generally easy to open accounts cross-border with HSBC and moving money around the world is quick.

Card products can appear quite limited to those seeking flashy cards, with HSBC typically limiting its cards to the HSBC Advance and HSBC Premier product lines.

Jyske Bank

• Established: 1987 (took over Galliano Bank, established 1855).
• Jurisdictions: Gibraltar.
• Minimum deposit/balance: 200,000 EUR, negotiable.
• Personal banking: No.
• Commercial banking: Rarely, wealth management.
• Private banking: Strong.
• Remote account opening: Always.
• Mobile app: No.
• Cards: High-end credit card.
• Website: http://jyskebank.com/

Jyske Bank continues to perform well and has earned to be listed here for the third year in a row. The minimum deposit has gone up from 50,000 to 100,000 to 200,000 EUR. This is still a relatively low minimum considering the services offered.

Corporate accounts are rarely opened. The bank prefers to deal directly with private individuals’ wealth. Trusts and foundations are of course welcome.

LGT Bank

• Established: 1920.
• Jurisdictions: Liechtenstein, Switzerland.
• Minimum deposit/balance: Negotiable, possible as low as 50,000 CHF but 1 million CHF recommended.
• Personal banking: Yes.
• Commercial banking: Rarely, wealth management.
• Private banking: Very strong.
• Remote account opening: Sometimes.
• Mobile app: iOS.
• Cards: Full coverage (through Swisscard).
• Website: https://www.lgt.li/ and https://www.lgt.ch/

Although available as a consumer/personal bank, private banking is where LGT Bank shines. Owned by the prince of Liechtenstein, it is the primary bank of the royal family and caretaker of their wealth. Corporates are welcome but transactional banking is not what LGT Bank is catered for.

As for minimum deposit, I have seen LGT Bank accept as little as 50,000 CHF but they typically expect at least 250,000 CHF and prefer 1 million CHF.

Mauritius Commercial Bank (MCB)

• Established: 1838.
• Jurisdictions: Mauritius, Seychelles, Maldives.
• Minimum deposit/balance: A few thousand USD is usually eonugh.
• Personal banking: Some international, but residents are preferred.
• Commercial banking: International.
• Private banking: No.
• Remote account opening: Yes, but will often require an intermediary.
• Mobile app: Web.
• Cards: Full coverage, including a prepaid card product.
• Website: http://www.mcb.mu/

While the State Bank of Mauritius (SBM) did well this year, it is MCB that stands out the most and earns a spot on this year’s list. Many banks on the African east coast islands suffer from stagnation, but MCB is not letting itself fall into that category.

From the little things such as website design upgrades to bigger things like the ease of adding currencies and speed of wire transfers, MCB continues to develop and grow. I am told a full-feature mobile app is planned for 2015, which would put them firmly ahead of the competition, even ore.

National Bank of Abu Dhabi (NBAD)

• Established: 1968.
• Jurisdictions: UAE, Switzerland.
• Minimum deposit/balance: Negotiable, possible as low as 50,000 CHF but 1 million CHF recommended.
• Personal banking: Residents preferred.
• Commercial banking: Yes, local and regional preferred.
• Private banking: So far so good.
• Remote account opening: Only for private banking.
• Mobile app: iOS, Android.
• Cards: Full coverage, including prepaid and virtual.
• Website: http://www.nbad.com/ and https://www.nbadsuisse.ch/

NBAD is a bank that strikes an almost perfect balance between the conservative, cautious approach for which Abu Dhabi is known (as opposed to the wild-child Dubai) and banking services sophistication. This is the bank I prefer over Abu Dhabi Commercial Bank (ADCB), listed above, when for long-term money management.

Mobile and internet banking look and feel dated by now, but this is a bank I at least don’t interact with often. Funds just go into prearranged investment accounts and wealth management.

Recently, NBAD’s private banking services have proven successful.

OCBC (Oversea-Chinese Banking Corporation)

• Established: 1932.
• Jurisdictions: Singapore, Malaysia/Labuan.
• Minimum deposit/balance: Depends on account type, 10 – 100,000 SGD.
• Personal banking: Residents greatly preferred.
• Commercial banking: Yes, local and regional preferred.
• Private banking: Strong, offered through subsidiary Bank of Singapore.
• Remote account opening: Only for private banking.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: http://www.ocbc.com/

OCBC is a bit more cautious than DBS, taking a very thorough approach to companies that aren’t Singaporean. Hong Kong and Labuan companies are generally accepted, but beyond that it gets difficult.

It is however a phenomenal bank. Their internet banking is easily the second best in the world and probably the best mobile banking. Card products are varied and has something for everyone, but are only available in SGD (that I have seen).

Card services are excellent, with very attractive bonuses and discounts for those who spend a lot of time in Singapore.

OCBC also runs iOCBC, which is a trading platform.

QNB (Qatar National Bank)

• Established: 1964.
• Jurisdictions: Qatar, Lebanon.
• Minimum deposit/balance: A few thousand QAR (a few hundred USD/EUR/GBP).
• Personal banking: Some international, but residents and GCC nationals preferred.
• Commercial banking: Yes, local and regional preferred.
• Private banking: Untested.
• Remote account opening: Rarely, through intermediary or travelling bank representative.
• Mobile app: iOS, Android.
• Cards: Full coverage, including a prepaid card product.
• Website: http://www.qnb.com.qa/

QNB is another one of those banks that just so well-integrated into a business that I rarely see them. Everything just runs smoothly.

While the bank from time to time does open accounts for offshore companies and international start-ups, they prefer to deal with companies registered in Qatar or countries in the region.

QNB has highly sophisticated services and excellent range of cards. Internet and mobile banking facilities are very robust.

SEB (Skandinaviska Enskilda Banken)

• Established: 1972 (or 1856).
• Jurisdictions: Sweden, Estonia, Singapore, Finland, Latvia, Luxembourg.
• Minimum deposit/balance: None.
• Personal banking: Usually open to non-residents.
• Commercial banking: Yes, local and regional preferred but will consider anyone.
• Private banking: Getting better.
• Remote account opening: Essentially never.
• Mobile app: iOS, Android.
• Cards: Full coverage, including virtual cards (Estonia).
• Website: http://seb.se/ – http://www.seb.ee/ – http://seb.fi/ – http://www.seb.lv/

What do you get if you mix rock-solid customer service, highly sophisticated banking services, top-notch banking and mobile banking facilities, and low fees? SEB.

It is a very pragmatic bank, meaning that they will consider any application. They have lately become very keen on meeting in person but will accept most forms of intermediaries as long as there is a power of attorney in place.

SEB private banking (Singapore and Luxembourg) is getting better. It’s early too comment on the returns but the auxiliary services have improved greatly in the last couple of years. The bank is clearly dedicating more resources to this customer segment.

Standard Bank (Stanbic)

• Established: 1862.
• Jurisdictions: Isle of Man, Jersey, Mauritius, South Africa, Ghana, Angola, Singapore, South Africa, UAE.
• Minimum deposit/balance: 5,000 GBP/EUR/USD.
• Personal banking: Yes, international.
• Commercial banking: Yes, international.
• Private banking: Yes, quite good.
• Remote account opening: Depends on region, generally yes.
• Mobile app: iOS, Android.
• Cards: Full coverage, including virtual cards (Estonia).
• Website: http://www.standardbank.com/

Standard Bank is easily Africa’s finest bank, and it’s been taking that banking tradition across the globe.

For business banking, they prefer clients that at least have a semblance of connection to Africa. Sometimes it’s enough just to offer services to Africa and do the occasional promotion. The bank does this to protect its African identity.

The banking services offered vary between regions, with Africa being largely local consumer and commercial banking focused and Isle of Man and Channel Islands having a greater focus on wealth management and international banking.

Account opening is a breeze and can in most cases be done remotely. A lot of people complain about it being problematic. In nearly all cases, that’s down to the would-be entrepreneur not having a proper business plan and no African connection.

Standard Chartered

• Established: 1969.
• Jurisdictions: Brunei, Hong Kong, Singapore, UAE, Malaysia/Labuan, South Korea, China, Macau, Mauritius, Tanzania, Lebanon, Bahrain, Guernsey, Jersey, Chile.
• Minimum deposit/balance: Varies, negotiable, recommended 100,000 USD or 1 million USD turnover.
• Personal banking: High-end only, not offered everywhere.
• Commercial banking: Yes, international.
• Private banking: Strong.
• Remote account opening: No, but is very lenient.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: http://www.sc.com/

Although they occasionally dabble in personal, Standard Chartered is a through and through corporate bank but with strong, well-developed private banking wings. An international business owner will be hard pressed to find a bank that does international banking better than Standard Chartered.

Excellent coverage of currencies worldwide and real tangible physical presence, with the bank being licensed in over 60 jurisdictions.

Splendid internet banking facilities. Card services are commendable. SC is often the only bank through

Tai Fung Bank (Banco Tai Fung)

• Established: 1942.
• Jurisdictions: Macau.
• Minimum deposit/balance: None.
• Personal banking: Yes, usually accommodating to non-residents.
• Commercial banking: Yes, regional and local preferred.
• Private banking: No.
• Remote account opening: Unknown, probably not.
• Mobile app: iOS, Android.
• Cards: Full coverage, including dual currency China UnionPay cards (CNY and MOP).
• Website: http://www.taifungbank.com/en_US

Macau’s finest local bank. Tai Fung Bank is in many ways the standard by which other Macanese banks ought to be compared, because many of them are lagging far behind Tai Fung in technical innovation and sophistication. I can think of a couple of banks even in Hong Kong that could learn a thing or two from Tai Fung.

Account opening can be a hassle for non-regional companies, but I have had an almost 100% success rate so far.

Internet banking is solid. Mobile app is a bit clunky and freezes at times, but is overall good.

UBS

• Established: 1854.
• Jurisdictions: Switzerland, Singapore.
• Minimum deposit/balance: Varies from 0 to 2 million CHF.
• Personal banking: Rarely for non-residents.
• Commercial banking: Local companies preferred, non-resident companies only for large and established businesses or businesses looking to establish a Swiss presence.
• Private banking: Among if not the best in the world.
• Remote account opening: Rarely.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: http://www.ubs.ch/ and http://www.ubs.com.sg/

The largest of the two Swiss banking giants, UBS turned 160 years old in 2014. And it’s a very spry 160-year old, with the greatest internet banking in the world. Everything is where it should be. Personal customization is possible to an impressive degree.

And then there is the private banking. Unsurprisingly, it is outstanding. It’s not just about the returns on investment, it’s the quality of the personal experience and the level of involvement and personalization. UBS is the asset manager of many trusts and foundations.

UBS does everything right and executes it to Swiss perfection. I cannot recall a single unpleasant experience with UBS, and it is a crucial bank in my own and many of my clients’ businesses. They do this without ever giving the impression of thinking too highly of themselves.

UOB (United Overseas Bank)

• Established: 1935.
• Jurisdictions: Singapore, Brunei, Malaysia/Labuan, Hong Kong.
• Minimum deposit/balance: Varies, 10 – 20,000 SGD recommended.
• Personal banking: Yes, but usually only high-end offered to non-residents.
• Commercial banking: Regional and local companies preferred.
• Private banking: Untested.
• Remote account opening: Rarely.
• Mobile app: iOS, Android, Blackberry.
• Cards: Full coverage.
• Website: http://www.uobgroup.com/

UOB is yet another bank that just sits quietly in the background of a number of businesses, and has done so for decades in some cases.

Strong range of currencies and card products, backed with customer service that has always been available when needed (which admittedly hasn’t been very often!).

VP Bank

• Established: 1956.
• Jurisdictions: Liechtenstein, Switzerland, British Virgin Islands.
• Minimum deposit/balance: Varies, around 500,000 CHF/EUR/USD recommended but a lot less may suffice.
• Personal banking: Yes, but usually only high-end offered to non-residents.
• Commercial banking: Yes.
• Private banking: Strong.
• Remote account opening: Sometimes.
• Mobile app: iOS, Android.
• Cards: Full coverage (through Swisscard).
• Website: https://www.vpbank.com/

VP Bank is first and foremost a private bank, and a very good one at that. In addition to Liechtenstein and Switzerland (and a handful other), they are present in a rather interesting jurisdiction: the British Virgin Islands, which as we learned just a few weeks ago has a rather small banking sector.

However, VP Bank can – interestingly – also be a reasonably attractive business bank in Liechtenstein. Fees are high but not prohibitively so as with most other banks in the country. They will consider applications of companies from all corners of the world. Having an intermediary helps.

Honourable Mentions

Below is a list of banks that have stood out in 2014 but with which I do not yet have long enough a relationship or extensive enough an experience to consider one of the best.

• CMB
• Credit Suisse
• Diamantbank
• ING
• Kazkommertsbank
• KBZ
• Lloyds
• Maybank
• Norvik Banka
• ZKB

CMB (Compagnie Monégasque de Banque)

• Established: 1976.
• Jurisdictions: Monaco.
• Minimum deposit/balance: 250,000 EUR minimum, 1 million EUR recommended.
• Personal banking: As an extension of private banking.
• Commercial banking: Wealth management.
• Private banking: Strong.
• Remote account opening: Usually.
• Mobile app: iOS, Android.
• Cards: Credit cards.
• Website: http://www.cmb.mc/

A new but very promising banking relationship.

Credit Suisse

• Established: 1856.
• Jurisdictions: Switzerland, Bahamas, Liechtenstein.
• Minimum deposit/balance: Varies from none to millions of CHF depending on services.
• Personal banking: Yes, but rarely for non-residents.
• Commercial banking: Yes, a bit more lenient than UBS.
• Private banking: Strong.
• Remote account opening: Basically limited to private banking.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: https://www.credit-suisse.com/

Diamantbank

• Established: 1993.
• Jurisdictions: Ukraine.
• Minimum deposit/balance: None, but 1 million UAH (circa 50,000 EUR or 60,000 USD) recommended.
• Personal banking: Yes.
• Commercial banking: Yes.
• Private banking: Yes.
• Remote account opening: No.
• Mobile app: Web.
• Cards: Full coverage.
• Website: http://diamantbank.ua/en/

Everything you can imagine private banking in a country like Ukraine in a city like Kiev with a bank with a name like this would offer, Diamantbank offers – and then some. This is budget opulence at its finest.

Couple this with high interest rates (over 20% for UAH, around 8 to 9% for EUR/USD) and staff that speaks generally good English and you have a banking relationship that is as enjoyable as it is risky.

Account opening is very quick for personal accounts. Just show your passport with a valid entry stamp to prove that you are a non-resident.

ING

• Established: 1991 (1743).
• Jurisdictions: Belgium, Luxembourg.
• Minimum deposit/balance: Varies from none to millions of CHF depending on services.
• Personal banking: Strongly prefers regional residents.
• Commercial banking: Yes, open to all reputable jurisdictions.
• Private banking: Untested.
• Remote account opening: Rarely.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: https://www.ing.be/ and https://www.ing.lu/

I have been with ING for various reasons for a long time but until recently only as a secondary or tertiary bank. After meeting some of their senior staff and analysts at conferences during 2013 and 2014, I have shifted more and more business towards them. So far it’s been great. Very promising relationship.

Kazkommertsbank (KKB)

• Established: 1990.
• Jurisdictions: Kazakhstan.
• Minimum deposit/balance: 1 million KZT (circa 4,000 EUR or 5,000 USD) recommended, but none enforced.
• Personal banking: Yes.
• Commercial banking: Yes, but prefers some connection to Kazakhstan or CIS region.
• Private banking: No.
• Remote account opening: They will “consider each application”.
• Mobile app: No.
• Cards: Basic coverage.
• Website: http://en.kkb.kz/

A visit to Kazakhstan went by faster than planned and I found myself with almost a whole week to spend in this extremely interesting country. To make a long story short, I ended up meeting some of KKB’s senior management.

At the time, opening an account with KKB did not require a particularly thorough due diligence process. Things have tighten some in recent years.

Although this is a brand new relationship, things have been very good so far. Fees are very low.

KBZ Bank (Kanbawza Bank)

• Established: 1994.
• Jurisdictions: Myanmar (or Burma).
• Minimum deposit/balance: None.
• Personal banking: Yes.
• Commercial banking: Local connection preferred.
• Private banking: No.
• Remote account opening: They will “consider each application”.
• Mobile app: iOS, Android.
• Cards: Basic coverage.
• Website: http://www.kbzbank.com/

For a long time, banking in Myanmar (or Burma, as you may prefer) in not for the faint of heart. In recent years, KBZ has positioned itself as the most internationally-minded of all banks in the country.

Lloyds Bank

• Established: 1765.
• Jurisdictions: Isle of Man, Jersey, Gibraltar, UK.
• Minimum deposit/balance: Depends on account type. From none to 50,000 GBP.
• Personal banking: Yes (except for UK).
• Commercial banking: Yes (except for UK).
• Private banking: Yes.
• Remote account opening: Yes.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: http://international.lloydsbank.com/

Lloyds International offers a relatively easy way to open personal bank accounts in Isle of Man, Jersey, or Gibraltar. Account opening can be done remotely and only require a filled in application form and a certified passport copy. Corporate accounts can also be opened but the bank is much more selective.

In the UK and for UK resident companies, Lloyds is an excellent bank for businesses of all sizes. Non-resident companies (including UK companies with no ownership and management in the UK) very rarely qualify.

Maybank (Malayan Banking Berhad)

• Established: 1960.
• Jurisdictions: Malaysia/Labuan, Philippines, Singapore.
• Minimum deposit/balance: None, but a few thousand USD is recommended.
• Personal banking: Yes, residents strongly preferred.
• Commercial banking: International clients should have some local connection.
• Private banking: Untested.
• Remote account opening: Unknown.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: http://www.maybank.com/

One of the more internationally-minded banks in the Philippines and a solid banking partner in Malaysia and Labuan.

Norvik Banka

• Established: 1992.
• Jurisdictions: Latvia.
• Minimum deposit/balance: None.
• Personal banking: Yes, international.
• Commercial banking: Yes, international.
• Private banking: Untested.
• Remote account opening: Usually, a visit it sometimes requested.
• Mobile app: Android.
• Cards: Full coverage – wide choice of currencies.
• Website: https://www.norvik.eu/

Norvik falls somewhere between the giants SEB and Swedbank on the one hand and the faux private banks Rietumu and ABLV on the other hand. Useful bank for personal banking and international business banking. EU persons and companies are preferred but they will consider any application.

Superb internet and mobile banking. Fairly strong range of trade and investment opportunities.

ZKB (Zürcher Kantonalbank)

• Established: 1870.
• Jurisdictions: Switzerland.
• Minimum deposit/balance: None for personal and commercial banking. 250 – 500,000 CHF for private banking.
• Personal banking: Residents only, Zürich residents preferred.
• Commercial banking: Residents only, Zürich residents preferred..
• Private banking: Strong.
• Remote account opening: No.
• Mobile app: iOS, Android.
• Cards: Full coverage.
• Website: https://www.zkb.ch/

As we discussed at the end of November in Jurisdiction Spotlight: Switzerland, ZKB is one of very few Kantonalbanks that will take on non-resident clients.

ZKB is a medium-sized with all the charms of a small bank but reportedly the financial stability of a big bank.

And that concludes this year’s edition of The Best Offshore Banks.

See also

• The Best Offshore Banks 2013
• The Best Offshore Banks 2012
• List of Offshore Banks

Today, our quest to explore the British Overseas Territories continues. Next on the agenda are a group of islands often wrongly attributed to being in the Caribbean when in fact they are located quite a ways out into the Atlantic: Bermuda.

With an almost squeaky clean reputation, this jurisdiction plays a pivotal role in large-scale tax planning. But can Bermuda be used for smaller operations as well? And how is different from almost everyone else? Let’s find out!

History

The islands of Bermuda may have been uninhabited prior to the arrival of Spanish settlers in 1505 when they were discovered by Juan de Bermudez.

In 1612, an English ship (the Sea Venture) bound for Jamaica crashed on Bermuda in a hurricane. The Sea Venture can be seen to this day on the Bermuda coat of arms, which also appears in the flag.

This marked the first settlements on Bermuda. The shipwrecked later continued their journey to Jamaica but returned to Bermuda after seeing famine in Jamaica. The new settlers tried to build up agriculture but were unsuccessful.

With the creation of the Somers Isles Company, Bermuda was divided into nine parts, each with a different owner. The Somers Isles Company’s efforts failed to yield successful crops. This had the side-effect that slavery in Bermuda never took off quite as it did in for example the Caribbean. Instead, Bermuda grew as a for the time relatively equal multi-ethnic society.

As we learned when we were looking at Turks and Caicos Islands, Bermudians arrived in 1678 and set up salt raking operations. This effectively meant that Bermuda had created its own colony and colonies were not permitted to do so. Meanwhile, Bahamas laid claims on TCI. A long legal dispute followed which ultimately saw Bahamas gain control over TCI.

Unable to find another source of income, Bermudians took to their largest natural resources, the Bermuda cedar, and started making ships and soon earned a reputation for being some of the best ship builders. The Bermuda rig and Bermuda sloop were very popular with privateers and merchants.

Bermuda was left alone until the American independence war, during which Bermuda’s strategic location would play an important role in the English fighting. At the same time, Bermuda relied heavily on North America for food imports. When the English lost military bases and territories on the mainland, Bermuda became an extremely valuable port.

Hamilton was founded in 1790 and by 1815 had become the capital of Bermuda.

In the years between the wars in the Americas and before the outbreak of the first world war, Bermuda grew rapidly as a tourist destination for wealthy Americans.

During the second world war, the British gave the US right to rent land to set up military bases on various British territories, including Bermuda where a base was set up in 1941. This effectively handed over military responsibilities of Bermuda to the US and was a big relief for the British military. The base was closed in 1995.

Following the end of the second world war, Bermuda has seen great growth and prosperity. A new constitution was enacted in 1968. A referendum for independence was held in 1995, with nearly three quarters of the voters rejecting independence.

The economy is today primarily dependent on international financial services and tourism.

Overview

Map from Wikipedia.

Bermuda Companies and Entities

Regulator

Essentially all financial activities mentioned here are regulated by the Bermuda Monetary Authority (BMA) which – hands down – ranks as one of the most responsive and informative of financial services commissions and equivalents.

The BMA frequently invites the public to discuss regulatory changes and best industry practices. What I’m getting at is if there are other regulators out there reading this: Learn from what BMA is doing.

Bermuda Exempted Companies

Companies are primarily regulated by the 1981 Companies Act, with major changes taking place in 2005 to bring Bermuda in line with new international standard on compliance. This brought along the Companies Amendment Act 2006.

Under this law and amendment, Bermudian companies are required to have 60% local ownership but can opt out of this by not trading with local persons or companies, except for other so-called exempted companies.

A minimum of two directors is required, both of which must be natural persons. A resident company secretary is also required, although one of the directors can and often does assume the role as secretary. The sole exception to this are for companies whose shares are publicly traded on a designated stock market, such as New York or London. There must be at least one shareholder, which can be a natural or legal person resident anywhere.

Non-exempt companies require two directors which need not be Bermudian residents.

Other Companies and Entitites

Foreign companies can establish themselves in Bermuda as a permit overseas company. These are in essence companies incorporated abroad but which carry on business in Bermuda like an exempt company with most of the same regulations and requirements.

Partnerships are available, including a Limited Partnership. Two partners are required. There must be a local representative, which need not be one of the partners.

Taxation

None, unless the company has local employees in which case a payroll tax applies (up to 14%).

Costs

Fees in Bermuda are higher than in many other jurisdictions. The government fee alone stands at just under 2,000 USD minimum per year; more if the company has a share capital of greater than 12,000 USD (shares valued at minimum 1 USD each). Adding registered agent’s fees and other fees on top of this, it can often cost 4,000 USD and up per year just to maintain a Bermudian company.

Public Records

Public records are available at the Bermuda Registrar of Companies.

Bermuda is not a particularly suitable if you are looking to hide your affairs. The regulator, BMA, goes through great lengths to ensure due disclosure.

Record Keeping (Bookkeeping)

Required by law. Audits can generally be waived by the shareholders.

Reputation

It’s a tax haven, but it’s quite possibly the most reputable one in the world. When there is a media crusade against the likes of Apple and Google, which utilize Bermuda as a part of a greater tax minimization structure, it is usually the companies’ names which are dragged through the mud and not so much Bermuda’s.

The OECD has given Bermuda the rating Largely Compliant. The gaps are mostly about ongoing monitoring.

With secrecy all but removed, Bermuda has established itself as a reputable financial center.

Bermuda Trusts

Bermuda is quite popular for its trusts, which as a whole are governed by several laws, such as the The Trustee Act 1975 and Trusts (Regulation Of Trust Business) Act (for trustees/trust companies).

Each Bermuda trust must have one resident trustee in order to avoid stamp duty (no other tax is applicable). This can be a nominee or a public or privately held trust company.

Although not defined in law, protectors can be assigned. These are meant to ensure that the trustee continues to act as per the settlor’s desires. The protector is usually empowered to remove trustees.

Trusts need not be registered or disclosed to Bermudian authorities, unless the trust has an ownership interest in a Bermudian company.

Trusts must submit annual audited returns. Perpetuity stands at 100 years. Foreign inheritance laws are excluded in law.

Noteworthy Service Providers

As always, this is not a recommendation.

(L) = Licensed service provider, as of publishing this post.

• Appleby (L)
• Butterfield (L) – Bank, trustee
• Conyers Dill (L)
• Hamilton (L)
• St. George’s (L)

Insurance in Bermuda

Governed by the BMA under the Insurance Act 1978, insurance, re-insurance, and related services make up the lion’s part of Bermuda’s international financial services sector, accounting for over 160 billion USD of GDP.

A wide range of different classes of insurance or re-insurance licenses are available, enough to cater to anyone’s insurance issuing needs. Several of the world’s largest insurance companies are present in Bermuda in one way or another.

Strict regulations are in place to prevent abuse and keep the jurisdiction’s reputation clean.

Banking in Bermuda

Foreign banks were for a long time entirely excluded from Bermuda, which means that the banks that are active in Bermuda have real links to the local economy, ranging from everyday finances to tourism to financial services. This is unique among most if not all other small tax havens, whose banking sectors are enormously inflated by having several hundred times more in foreign capital deposits than from the local economy.

The banking sector is regulated by the BMA under The Banks and Deposit Companies Act 1999.

Secrecy

Bermuda never enacted any particularly strong banking secrecy. Relevant competent authorities are able to extract information from banks to comply with exchange of information requests (TIEA, DTA).

Banks in Bermuda

Below is a list of all banks licensed in Bermuda:

• Bermuda Commercial Bank
• Butterfield Bank (biggest bank in Bermudian market share)
• Clarien Bank
• HSBC (formerly Bank of Bermuda until 2004)

Banking is of a generally high quality. Minimum deposits vary from none to the millions depending on type of services required.

There is no IBA in Bermuda.

Bermuda Financial Services

Non-bank financial services is a well developed sector in Bermuda, with many wealth management and fund management companies being licensed by the BMA.

IT Infrastructure

Bermuda has a relatively strong IT infrastructure, with multiple cables directly to the US.

Notable web hosting and IT service providers in Bermuda include Logic, QuoVadis, and Paragon. Prices are very high compared to USA and Europe, but affordable compared to the likes of Cayman Islands.

Living in Bermuda

Quality of Life

Life in Bermuda can be very comfortable and luxurious, being one of the highest-income territories in the world. Unlike most tax havens, Bermuda has a strong domestic economy and the international financial services sector is well-integrated into every day life.

Hurricanes can be a problem.

Taxation

There is no income tax, capital gains tax, or sales tax. A social security insurance is charged for those working in Bermuda; 64.14 BMD per week, half paid by the employer and half paid by the employee.

Immigration and Relocation

A work permit is required and getting a job is almost impossible outside of senior legal and financial service professions. The local work force is highly skilled and competition is fierce for what few jobs exist. Starting a business based in Bermuda is equally difficult.

Retiring in Bermuda is limited to three categories:

• Group A: owners of Bermudian property.
• Group B: requires a minimum of five years of gainful employment in Bermuda.
• Group C: spouse to members of Group A or B.

Final words

Bermuda is one of the most interesting tax havens, although the costs puts it out of reach for small operations.

See also

• OECD Peer Review of Bermuda (also has a list of TIEA and DTA)
• Financial Secrecy Index Bermuda
• FATF documents on Bermuda

Click here to see other posts in the Jurisdiction Spotlight series.

A few weeks ago, I revisited a post about how to incorporate an offshore company. Today we will continue this trend and rewrite another popular post in need of a facelift, namely How to Open an Offshore Bank Account.

This post is not about optimizing your chances to have your application be approved. I have written elsewhere about that.

Basics

In the most fundamental sense, an offshore bank account is a bank account held with a bank in a jurisdiction (meaning an independent country or a subnational territory such as Hong Kong or British Virgin Islands) which is different from the one in which you are resident and/or of which are a citizen.

However, if you live in Italy and open a bank account in France, the bank account in France is usually not considered an offshore bank account. There is typically an element of banking secrecy or tax advantage involved for a bank account to be referred to as offshore. In reality, with the advent of TIEAs and DTAs and other changes in the international financial services sector, the benefits of secrecy and any tax advantages a bank account in and of itself may have are much less prominent than often advertised.

Whatever your reason for wanting to open an offshore bank account, make sure that the decision you make is an informed one. I strongly recommend reading the following posts to broaden your horizons:

• How to Choose Offshore Bank
• Tips on How to Evaluate a Bank

I assume now that you have done or will do enough research on how to choose and how to evaluate offshore banks.

DIY vs DFY

Whether to do it yourself (DIY) or have it done for you (DFY) is a question you will have to ask yourself.

If the account is opened as a part of forming an offshore company, your service provider will almost definitely insist on that they help you open the bank account. Most service providers charge a few hundred upwards to a thousand USD/EUR for this service.

Do you need someone’s help? Probably not, but it is very convenient. Very few banks actually require an intermediary but it will very often help convince a bank to take on clients that they otherwise wouldn’t, such as companies that are smaller or higher-risk than the bank’s usual requirements.

In many cases, though, all you end up doing is paying someone to help you fill out the bank application forms and forward all the documents to the bank.

The downside to relying on your service provider is that they may not have the banking connections that you need. If you want to bank in a particular jurisdiction or with a particular bank not supported by your service provider, you are faced with a problem. Large and reputable service providers can leverage their reputation to establish a connection with the bank on your behalf (especially if they are physically present where the bank is), but this tends to come at a premium rate.

Can you do it yourself? Yes, if your business is an attractive prospect to the bank. This means showing transparency to the bank and backing up your business with a solid business plan including financially sustainable projections for the first two years. It also means showing either an initial deposit or annual turnover in line with what the bank expects.

Filling In The Application

By now you have either got the forms from the bank or from your service provider. A really good service provider will have filled in everything for you (or offer it as an extra service) and you just need to sign it.

It’s perfectly OK to ask the bank for help with filling in the form. Not all fields are crystal clear and can require explanation, especially in case of complex ownership structure.

When opening a bank account for an offshore company, check with your registered agent if they are willing to forward mail to your residence or if you should specify another address (your residence, a PO box if permitted, other) as the mailing address.

Documents Required to Open an Offshore Bank Account

This is the part people have the biggest problem with. It also causes a lot of unnecessary delays with the bank.

Certification, Notarization, and Apostille – Oh My

Banks are required by law to identify the signatories and the beneficial owners of all bank accounts. That’s more or less the full extent of the legal texts in most jurisdictions.

This means a bank needs to know your name, nationality, date of birth, address, and possibly some other contact information such as a phone number or email address. In theory, banks could allow and accept applications from anyone using just a basic sign-up form much like the ones you encounter on Amazon and Netflix.

However, because banks can face severe repercussions for failing to validate the identity of an account holder, they ask for supporting documents to verify the applicant’s identity.

Because it is easy to tamper with copies when the bank has not seen the original, banks usually ask for documents to be certified. There are essentially three tiers of certification: certification, notarization, and apostille. There is a fourth, but we try to not speak too much about the old sleeping giant that is legalization.

The most basic is (confusingly) just called certification. This is when a copy is made of for example your passport and someone writes a note on the copy saying that they certify it is a truthful copy of the original and that they have seen the original. Virtually anyone (except for the bearer of the document to be certified) can be a certifier but in reality it’s limited to legal professionals, accountants, or others of a reputable legal or financial professional. I have seen many banks that trust a company enough to have the company’s CFO or other senior manager act as a certifier of passport and other documents.

Next we have notarization. This is a person who is registered and or licensed with the government one way or another to certify documents. Notaries are almost exclusively lawyers by training. Common law countries have so-called notary publics or public notaries. Public notaries may in some cases have less powers than a notary and some banks will therefore reject certification by a public notary.

Lastly, we have apostille. Under the succinctly named Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents for Foreign Public Documents, the age-old process of legalization was finally put to rest in – as of writing – 105 jurisdictions.

Before the Apostille Treaty, the only way to have a document certified internationally was to have a copy certified at the embassy of a certain country. Without going into too much detail, the Apostille Treaty essentially bestows those powers in notaries or public notaries. In order to prove that the notary has been bestowed such powers, the certified copy will have apostille affixed. This is an assurance from the government (which has signed the Apostille Treaty) that the certifier is duly registered and authorized.

What about countries that aren’t signatories to the Apostille Treaty? Some banks there still ask for apostille under the reasoning that the document is certified by a notary and the additional level of apostille strengthens the trust in the copy, but most either settle for notarization or require the age-old legalization process.

Personal Accounts

The only truly universal piece of document required to open a personal bank account is a proof of identity, usually a passport but any photo ID may suffice (up to the bank’s policies).

However, in many cases (especially for remote account opening) some sort of proof of address may be required. Banks usually ask for a utility bill, bank statement, credit card statement, or official government letter (such as proof of tax payment or tax return).

Additionally, some banks may ask for references. The most common is a reference from your local bank. Most banks are happy to write such references, but you may need to speak to a branch manager or other senior official with the bank as the front-line customer service might not have a clue what you are talking about. It’s not unusual for banks to charge around 10 to 100 EUR/equivalent for a reference.

Sometimes, a professional reference is requested. This would be a reference from a lawyer, accountant, doctor, or person of other licensed and regulated, reputable profession. It’s often asked that the relationship span a certain number of years. This type of reference can be challenging to procure, which banks are well aware of and will often waive the requirement if the rest of your application looks good.

Corporate Accounts

For you as director and or shareholder, the bank will require the same documents as mentioned above under Personal Accounts.

If nominees are involved, the bank will require documents for them as well.

Now, the bank will also need documents for the company itself. Usually, this includes some or all of the following:

• Documents which set out the primary rules of the company, usually called Articles of Incorporation, Articles of Association, or Articles of Organization; even more variations exist.
• A memorandum of association (if one exists), which is a document which outlines the function of the company. Also called memorandum of incorporation.
• Certificate of incorporation to prove that the company is incorporated.
• For companies that have been incorporated for some time (as determined by the bank’s application policy), a certificate of good standing may be required to prove that the company is still registered. Often not necessary in jurisdictions with public company records.
• Certificate of incumbency which may list the company’s members, shareholders, directors, officers, and other officials. The purpose of this certificate is to prove who is allowed to sign agreements on behalf of the company.
• A proper business plan.

All but the business plan usually need to be certified. If you are opening the account by introduction from your registered agent or service provider, they will normally take care of the corporate documents.

Other Entities

The documents required to satisfy the banks for other entities, such as trusts and foundations, are largely the same as for corporate accounts but depending on your role in the entity, the documents you need to provide should not be that much different from a personal account.

The trustee, registered agent, foundation manager, or equivalent will normally take care of everything else.

Send Application

Now that you have filled in the application forms, written a spectacular business plan that you genuinely believe in, and have compiled all the documents you need, head down to the nearest post office or courier to send the documents to the bank or to the introducer. Registered mail and couriers are recommended because they are associated with a lower risk of being intercepted or lost.

If everything is fine with the application and the bank approves it, you have successfully opened an offshore bank account!

Expect anywhere from a few days to several weeks for the application to be processed.

If you are meeting the bank in person, head over to How to Open an Offshore Bank Account in Person to learn how to handle that process.

See Also

• The Best Offshore Banks of 2014
• List of Offshore Banks
• Why Banks Say No to You But Yes to Me

Some months ago, I was in Oman for a period of several weeks. I had been in Oman before but only shorter stays in Muscat. This time I had a chance to see more of the country, and it’s a beautiful one.

It’s definitely one of the most open and tolerant countries in the region. I’d even put it ahead of UAE when it comes to ease of integration as a non-Arabic foreigner, although reports from expats might disagree with that sentiment.

But how does Oman do when it comes to financial services? Let’s find out, after a brief history lesson to set the right tone.

History

What today is Oman has some of the earliest signs of human settlement, some 100,000 years ago. Recorded history, however, starts quite late – not until the 7th century when Oman adopts Islam (during prophet Muhammad’s lifetime). The dominant sect became Ibadism, which is relatively moderate. Prior to the adoption of Islam, Oman was under various forms of Persian rule.

Oman was initially referred to as Muscat and Oman. The coastal city of Muscat, today Oman’s capital, was an important port in the Gulf of Oman which separates the Persian Gulf from the Arabian Sea and the Indian Ocean. It was also culturally different from the rest of Oman, being more cosmopolitan and secular.

The Portuguese took Oman in 1515 and held it until 1650, although Muscat was for several decades under Ottoman rule.

Rule of Oman shifted between different families and sultans, and the coastal areas were often under Iranian occupation.

In 1806, Said ibn Sultan Al Said came to power and under his rule, Oman established colonies across the African east coast and claimed Zanzibar. Oman profited greatly from the slave trade, until 1856 when Said ibn Sultan Al Said died and his two sons failed to agree on how to rule the sultanate. In the end, Oman and Zanzibar were split. (The Zanzibar Sultanate would later in 1896 engage in the shortest war in history, lasting less than an hour and mostly consisting of British bombardment of the palace.)

In 1868 Azzam ibn Qais Al-Busaid  was appointed imam and he attempted to use his role to form strong, central leadership. However, British involvement supported Turki ibn Said Al-Busaid instead, who took power in the early 1870s.

The French and the British bickered over Oman throughout the 18th and 19th centuries. Oman was ultimately declared independent but British influence remained strong.

The southernmost governorate of Oman, Dhofar, attempted to declare independence in 1964 when oil was found. The insurgents were ultimately quenched by 1975, when Oman was under the rule of sultan Qaboos bin Said Al Said who came into power in 1970.

Qaboos bin Said Al Said made several reforms to Oman and modernized the society. Health care, education, and poverty were tackled and improved. Qaboos bin Said al Said remains in power in Oman and is overwhelmingly popular with the people. The 1990s saw social liberalisation and Oman enacted its first constitution.

Oman today enjoys relative peace, stability, and equality compared to many other countries in the region. It produces oil but not as vast quantities as most others. Nearlly 80% of Oman’s economy depends on oil and natural gas trade, with the remaining 20% being very diverse. In recent years and thanks to its diverse landscape, tourism has been an increasingly important source of income.

Overview

Map from Wikipedia.

Oman Incorporation

General

There are essentially two types of companies in Oman: normal and FZ (Free Zone).

Normal Companies

There is no concept of residency for companies in Oman. If a company is registered or operated in Oman, it owes tax in Oman on its global taxable income. The upside is that this makes paying tax in Oman extremely simple when running an international business and the 12% tax rate is perfectly reasonable. The first 30,000 OMR of taxable income is not subject to tax.

While this might sound attractive, forming a company in Oman is not at all as straight-forward as in neighbouring UAE. Incorporating requires a license, which most law firms can help you with, and a minimum of 150,000 OMR (circa 300,000 EUR or 390,000 USD) paid up share capital. Furthermore, companies are required to maintain a majority Omani ownership.

FZ Companies

Companies incorporated in the Sohar FTZ have far more lenient requirements and are exempt from tax for a period of 10 to 25 years.

You are looking at around 2,500 OMR in government fees for formation, plus another 2,500 OMR in fees to a local agent. 5,000 OMR (circa 10,000 EUR/13,000 USD) is still quite high to form a company but a lot less than the 150,000 OMR otherwise required. Expect around 2,500 OMR minimum in annual renewal and maintenance fees, not including record keeping and related services.

FZ companies can have 100% foreign ownership.

However, even so, they are not suitable for entrepreneurs seeking to form a tax free non-resident company. Oman FZ companies are required to lease land on which their business will be conducted.

For larger companies seeking to establish a trading hub in the region and are looking for alternatives to UAE, Oman can definitely be worth a closer look.

Banking in Oman

General

The Omani banking sector is more developed than its customer base, to some degree comparable to Lebanon. Statistics are hard to come by but estimates say that somewhere between 10% to 20% of the Omani population is unbanked, instead relying on cash for day to day finances and alternative remittance methods such as hawala and remittance companies like Western Union to transfer money long distance and internationally.

Noteworthy Banks

There are seven banks licensed in Oman:

• Ahli Bank
• Bank Dhofar
• Bank Muscat
• Bank Sohar
• HSBC
• National Bank of Oman (NBO)
• Oman Arab Bank

Non-resident banking is relatively new to Oman but with English being a common business language and recent initiatives to attract investment in Oman, banks are starting to open up.

Bank Muscat and NBO are this writer’s personal favourite among the local banks, with both Arab Bank and HSBC being excellent international banking partners in the country.

Banking Secrecy

Banking secrecy is governed by Articles 24 and 70 of the Banking Law of Oman. The Omani banking secrecy is likely very strict, with the sultanate hitherto not having been able to sign a TIEA. The banking sector in Oman is however relatively small and has not yet drawn significant outside pressure.

The OECD has not yet rated Oman. FATF is generally happy with Oman for having criminalized money laundering and enabling authorities (at least in theory) to access bank information.

Being an absolute monarchy, it’s very hard to say for sure what the sultan can and cannot do. Should sufficient pressure arise, the sultan has power to compel banks to do anything.

Living in Oman

Quality of Life

Oman is a peaceful and comparatively moderate country. Being moderate compared to many of its neighbours, expats even from non-Arabic or non-Muslim countries often find life in Oman to be enjoyable, relaxed, and safe. However, very few stay for a long time (more than five to ten years), usually because it’s difficult to fully integrate as an expat (unless from another country in the region) and the expat community is quite small.

The heat can be scorching with summer temperatures reaching well over 40°C (104°F), sometimes exceeding 50°C (122°F).

Costs of living is generally low compared to for example Dubai. Rents vary depending on location with good ones starting at around 600 to 800 OMR in central Muscat, going up to several thousand.

Personal liberty in Oman is hindered by tight restrictions on freedom of speech with criticism of the government and Islam being frowned upon and not rarely clamped down on.

Crime is extremely low.

Taxation

None, except for a 6.5% of income in contribution to pension fund and social security.

Immigration and Residence

Oman is not typically a country to which people move to start an international business. Foreigners either move to Oman for work or to be with family.

Final words

Oman is attractive for banking and for living in for a couple of years on a work permit. While there are attractive tax benefits for businesses, there are no clear benefits compared to for example UAE or Bahrain, for running a business.

Oman’s banking sector is of high quality.

See also

• OECD Peer Review of Oman (also has a list of TIEA and DTA)
• FATF documents on Oman

Click here to see other posts in the Jurisdiction Spotlight series.

Much of what will be covered here was covered in a previous post about why banks say no to you but yes to me. I’d highly recommend reading that post first.

So you want to accept PayPal as an offshore company. Maybe you can’t even find your IBC jurisdiction of choice in the dropdown of countries; maybe they rejected your application.

Will PayPal accept your offshore company? No, most likely not. Neither will a lot of other payment service providers.

Let’s start by talking about risk and why you look dodgy.

You Pose a Risk

Risk of fraud. Risk of money laundering. Risk of abuse. Risk of regulatory. You name it. Chances are your company is incorporated in a jurisdiction with a poor reputation, but if you incorporated in for example Hong Kong, Malta, or maybe Isle of Man, you are in luck. Or, more likely, you made an informed decision where cost of incorporation was not a key deciding factor.

The problem is secrecy and lack of accountability. The fact that your IBC or other secretive company cannot be verified against a public record of companies coupled with the fact that your company is under loose accounting regulations are a big part of why companies like PayPal are hesitant to take you on.

Stop Posing a Risk

Something as simple as forming a payment processing subsidiary in a reputable jurisdiction can open new doors. UK is the foremost choice for this. A UK company can cost as little as under a hundred GBP to form; a few hundred if you want nominees in order to keep your name out of public records (nominees come with their own host of challenges, though).

UK banks very likely will not accept you (unless you are resident in the UK), but banks like Wirecard Bank and Deutsche Handelsbank are generally happy to take on European shell companies. While quite dreadful banks, they are tolerable enough for a pass-through account. With a bit of effort, you can find other European banks willing to take you on.

However, having a payment processing subsidiary is not all roses. There can be tax implications that you need to consider. In most cases, the tax issue ends up being a non-issue with the help of a good tax adviser and lawyer but it’s nonetheless a hurdle you must face.

Another thing to consider is that if you are an ecommerce operator, you probably need to inform your clients that the payment is processed by XYZ Billing LLP (UK) on behalf of XYZ Software Limited (Anguilla). It’s often enough to put this in the terms and conditions but you will want to make clear that customers will see XYZ Billing and not XYZ Software on their credit card statement to prevent chargebacks.

Find a Risk-Friendly PSP

Sometimes, forming a payment processing subsidiary is not an option. That’s where risk-friendly PSPs come in. There are a lot of players in this field.

The most respectable ones are companies like WorldPay and Braintree. They can act as middlemen and for example let you offer PayPal to your customer, albeit at a a much higher cost than you would directly.

Then there are e-wallet solutions such as Skrill, Neteller, Click2Pay, and so on. These require the user to have an e-wallet account and odds are quite high that customers will take their business elsewhere instead of bothering with that.

PSPs like 2CheckOut, Square, Stripe, and Bluesnap are also known to take on offshore companies from time to time.

It is rare to be given your own merchant account with these operators, but they support it and once you have built up history it might be worth inquiring about.

High-Risk Card Processing

The world of high-risk card processing is a dark and shady one. The finest operators are not known outside of tightly knit circles, processing billions in high-risk volumes.

There are some who offer their services in the open, though. Many of them are focused on adult entertainment but will take on regular ecommerce for other high-risk merchants, such as offshore companies. These include CCBill, Instabill, Verotel, Commercegate, and Zombaio.

They will charge an arm and a leg and it often works out more cost efficient to form a subsidiary if you aren’t actually selling high-risk goods. However, the convenience factor is hard to argue against.

Just make sure that you read and understand the fine-prints. These types of processors often ask for monthly fees, rolling reserves, and other types of costs that aren’t obvious per-transaction costs.

This week, we are back in the Caribbean on our voyage across the British Overseas Territories.

Second perhaps only to BVI in infamy and celebrity, it’s finally time to take a look at the Cayman Islands, from time to time referred to as the Americans’ preferred tax haven.

But, as always, we start a very long time ago.

History

The Cayman Islands were likely uninhabited by the time it was discovered by Christopher Columbus. If there had been any human settlements before, they had not stayed long enough to leave any evidence for architects to find (as of writing).

As such, Cayman Islands enter historybooks on the 10th of May 1503, when heavy winds drifted Christopher Columbus off-course. He was headed for Hispaniola (today Haiti and Dominican Republic) but instead came upon two islands (Little Cayman and Cayman Brac), full of tortoises. The islands were dubbed Las Tortugas.

A map from 1523, author unknown, shows three islands (Little Cayman, Cayman Brac, and Grand Cayman) together under the name Los Lagartos, meaning the alligators. By 1530, the name had changed to the local tongue variant: Caimanas.

The islands were home to pirates, smugglers, shipwrecked, and escaped slaves until the British took control in 1670, then as a part of Jamaica.

Permanent settlements in the late 17th century were initially unsuccessful, with arrivals from Jamaica being driven off by Spanish privateers. It was not until 1730 that a permanent settlement was first formed on the Cayman Islands.

In November 1794, ten ships wrecked off the eastern coast of Cayman Islands. The ships were a part of a convoy for HMS Convert. Thanks to the help of local Caymanians, everyone involved in the incident survived. Legend goes that there was a member of the royal family on board on one of the ships. As a sign of gratitude towards the locals for helping save his relative, King George III that the Cayman Islands would never be conscripted for war and never subject to British tax.

Cayman Islands remained a part or dependence of Jamaica until Jamaica’s independence in 1962. Rather than opting for complete independence, Cayman Islands decided to become a direct dependence of the British crown.

Today, the Cayman Islands is a major international financial center. Tourism is also a very important sector.

Overview

Map from Wikipedia.

Cayman Islands Companies and Entities

Regulator

The main regulator for the financial services industry in the Cayman Islands is CIMA: Cayman Islands Monetary Authority.

General Information

Cayman Islands companies are primarily regulated under The Companies Law 1961 (last revised 2013 as of writing).

There are mainly four types of companies available:

• Ordinary Resident Company
• Ordinary Non-Resident Company
• Exempt Company
• Exempt Limited Duration Company

While limitation by guarantee and unlimited liability companies are permitted, virtually all Cayman Islands companies are formed as companies limited by shares.

Companies can continue in the Cayman Islands and some Cayman companies can be continued elsewhere. This is also called redomiciliation or continuance of a company.

Ordinary Resident Company

This type of company is not really relevant for this context as it is limited in scope to local trade and requires a license. Shareholders must be submitted to the Registrar of Companies as well as immigration authorities to ensure ownership remains local.

Ordinary Non-Resident Company

This is one of the two business entity types most common for offshore incorporation. Ordinary Non-Resident Companies are similar to Ordinary Resident Companies, but require no license and need not submit list of shareholders to the immigration authorities. However, they may not trade within the Cayman Islands.

Share capital is usually 42,000 KYD or 50,000 USD to attract the lowest annual fee (as of writing 600 KYD).

Annual general meetings must be held but can take place anywhere.

There are no audit and filing requirements.

A register of the names, address, and dates of appointment and resignation of directors and officers must be submitted to the Registrar of Companies but are not subject to public inspection. A similar register is also required for shareholders but this needs not be submitted to the Registrar of Companies but can be stored anywhere, although usually with the registered agent.

One director and one shareholder are required. One person can assume both roles, although the board of directors typically has at least two members. Except for companies that engage in certain regulated activities, there are no limitations on minimum or paid-up share capital, but share capitals over certain amounts are subject to a higher annual fee (up to around 2,500 KYD as of writing).

Cayman Islands Exempted Company

Exempt companies are essentially the same as Ordinary Non-Resident Companies with a few modifications.

Notable, Exempted Companies may issue bearer shares (must be immobilized) and information about shareholders need not be disclosed. Additionally, they need not hold annual meetings and can have a secondary name in non-Roman script (for example Chinese characters).

Exempted Companies can also apply for a tax exemption, valid for 50 years, in case the Cayman Islands were to introduce a tax. With a long history and strong tradition of no tax, some view this as nothing more than a means for the registered agent and government to gain additional revenue from companies.

Limited Duration Company

Limited Duration Companies are exempted companied with a limit on how long they will exist (maximum 30 years). The memorandum of an LDC may contain certain conditions or events under which it is automatically wound up.

LDCs must have at least two members, meaning a single person cannot take on both the role of director and shareholder.

Partnerships

Partnerships – normal and exempted – are available, based on English law. One or more partners carry unlimited liability whereas one or more other partners carry limited liability.

Cayman Islands partnerships are rarely used.

Taxation

You guessed it. There isn’t any. At all. Save for a stamp and import duty.

Costs

The cost of incorporating and maintaining a company in the Cayman Islands starts at about double to triple of an IBC and goes up from there. For the smallest of businesses, these costs can be prohibitive.

Public Records

For Ordinary Resident Companies, all company details are available to public inspection.

For Non-Resident and Exempt companies, only some company details appear in General Registry, such as memorandum, date of incorporation, and registered address. Names of directors and shareholders do not appear in public records for these types of companies.

Record Keeping (Bookkeeping)

Cayman Islands companies are required by law to maintain due books of account to show flow of revenue and the financial status.

Reputation

This is difficult to assess for the Cayman Islands. On the one hand, it’s definitely a tax haven and its secrecy was problematic for a while. On the other hand, the government and CIMA have worked hard to turn the Cayman Islands into a fairly reputable jurisdiction.

OECD considers Cayman Islands to be Largely Compliant. The main areas of weakness are surrounding availability of information of beneficial ownership in complex structures and some lapses in accounting requirements.

Signing of the Convention on Mutual Administrative Assistance in Tax Matters will likely improve the international perception of the Cayman Islands.

Cayman Islands Trusts

Cayman Islands is a major trust jurisdiction and as such have most of the features in place one would expect from an offshore trust.

Trusts can opt to be exempted (tax exemption), in which case a 500 KYD annual fee applies. No other government fees are in place for trusts and non-exempt trusts need not be registered.

There are no taxes levied on trusts but a 40 KYD fee is payable, although this does not compromise the confidentiality of the trust as names of involved parties are not disclosed.

A specific law – the Confidential Relationships(Preservation) Law – is in place to strengthen the confidentiality of trusts and regulates the conditions under which information can be disclosed.

Protectors and private trust companies are permitted. There are mechanisms in place to prevent forced heirship.

The Hague Trusts Conventions has not been enacted in the Cayman Islands.

Noteworthy Service Providers

As always, this is not a recommendation.

(L) = Licensed service provider, as of publishing this post.

• Appleby (L)
• Bodden (L)
• Caledonian (L)
• Cayman National (L)
• Codan (L)
• DMS (L)
• Harbour (L)
• HMS (L)
• Solomon Harris (L)
• Sovereign Group (L)
• Stuarts Law (L)

Banking in Cayman Islands

Modern banking in Cayman Islands began in 1953 when Barclays opened the first commercial bank on the islands, although it did not deal with international banking. The rise of the Cayman Islands as a banking center coincided with the until then most prominent Caribbean tax haven, Bahamas, moving towards independence which made investors nervous.

The first bank to truly take on international banking was the The Bank of Nova Scotia (today Scotiabank), which set up base in 1965. The mid-1960s saw many infrastructural improvements in the Cayman Islands followed by several new laws, such as the Banks and Trust Companies Regulations Law.

By the 1970s, some 100 banks operated in the Cayman Islands. This grew to over 500 by 1985. The rapid growth of the Cayman Islands’ banking sector drew attention from abroad, especially the US, which saw the Cayman Islands as a major tax evasion and money laundering concern. In 1975 law titled The Confidential Relationships (Preservation) Law, meant to further strengthen banking secrecy, was enacted but it was effectively repealed three years later. By 1986, a unique agreement had been struck between the US and the Cayman Islands which pierced the until then ironclad banking secrecy.

Compared to for example the more discreet Swiss, the Cayman Islands banks and even regulators spoke proudly about their confidentiality to attract business during the 70s and 80s. Money laundering was more or less tolerated.

In the 1990s, the hedge funds industry became big business in the Cayman Islands.

Continued strong secrecy and laissez-faire regulations led to massive international criticism of the Cayman Islands, which in 1997 responded by enacting the Proceeds of Criminal Conduct Law (PCCL), which drastically weakened the banking secrecy in the Cayman Islands, which until then was among the strictest in the world. With the PCCL came due diligence standards and procedures in line with international standards.

But it wasn’t enough. In 2000, a major slap in the face was dealt to the Cayman Islands when FATF listed it on its 2000 list of uncooperative jurisdictions – but it was not blacklisted.

In order to get rid off this blemish and following the 9/11 terrorist attack on the US, Caymanian banks and fiduciaries were forced to perform retroactive due diligence. Because of the enormous cost of this process, a lot of small-time clients were thrown out from Caymanian banks.

Today the Cayman Islands banking sector is focused on high-networth businesses and individuals, although smaller clients are accepted from time to time.

Secrecy

The strictest forms of banking secrecy in the Cayman Islands are gone and the authorities are able to compel banks to disclose information. Despite initial attempts to avoid, Cayman Islands was ultimately forced to sign up for the EUSD, providing automatic exchange of information for personal accounts. It is also a signatory to the Convention on Mutual Administrative Assistance in Tax Matters.

Banks in Cayman Islands

There are 13 banks holding a Class A license and 185 banks holding a Class B license, with several hundred smaller banks (usually captive banks) not listed publicly. Some noteworthy banks are listed below.

• Butterfield Bank
• Caledonian
• Cayman National Bank
• FirstCaribbean International Bank
• Scotiabank Cayman

Cayman Islands Financial Services Sector

In addition to the aforementioned company management and banking sectors, the Cayman Islands are well known for many other financial services such as insurance, funds (hedge funds and mutual funds), and maritime operations.

There are over 11,000 mutual funds registered in the Cayman Islands.

Founded in 1996, the Cayman Islands stock exchange (CSX) is specially catered for funds and securities to be publicly traded. It has over 1,400 listings and a market capitalisation of over 1 billion KYD.

If you have ever strolled through a large harbour with yachts, you may have noticed a lot of them having one of those flags with a small Union Jack up in the corner and a blue backdrop, and under the vessel’s name it is written Georgetown. That’s a yacht registered in the Cayman Islands, Georgetown being its capital.

Some 2,000 vessels – ships of all varieties and private jet aircrafts – are registered in the Cayman Islands.

IT Infrastructure

Cable & Wireless (doing business as LIME) have an effective monopoly. Things have been getting better in the last couple of years, though. For a long time, internet connectivity was abysmal in the Cayman Islands. It’s now among the better connected territories in the Caribbean, but still of course decades behind solid land.

Living in Cayman Islands

Quality of Life

The Cayman Islands is generally considered the most developed of the Caribbean islands (arguably second if you include Bermuda) with a high standard of living. The islands are fairly well connected by air with several flights per day to the US.

Taxation

Unheard of, except for stamp duty and import tax.

Immigration and Relocation

Very, very difficult – except for companies that qualify under initiatives like the Cayman Enterprise City or those with professional skills not found among the local population, usually within financial services.

Final words

Cayman Islands is a semi-reputable, prestigious international financial center, tax haven, and offshore jurisdiction.

Forming a company in the Cayman Islands is costly but there are reputational advantages over many other tax havens, including BVI and Anguilla.

See also

• OECD Peer Review of Cayman Islands (also has a list of TIEA and DTA)
• Financial Secrecy Index Cayman Islands
• FATF documents on Cayman Islands

Click here to see other posts in the Jurisdiction Spotlight series.

As much as offshore web hosting may be of importance to you, so may your choice of top-level domain (or TLD for short).

What is a TLD?

A top-level domain is the last bit in a domain name.

The most popular top-level domain is .com (www.google.com). This blog uses .st (www.streber.st).

If you want to know more, this isn’t the right place. Head over to Wikipedia and familiarize yourself with the concepts of TLDs and ccTLDs.

Why does this matter?

OK, good. You’re back from Wikipedia. I now assume you will be familiar with the concept of domains and TLDs.

You can register .com from domain registrars across the world, such as eNom, Namecheap, or Namesilo.

Now, if you want to avoid US law for example, you might get the brilliant idea to register your .com domain from a domain registrar outside the US, such as InternetBS in Bahamas, IP Mirror in Singapore, and so on. Unfortunately, this accomplishes nothing because .com itself is controlled from the US by a company called Verisign.

Verisign is the domain registry and there have been several examples of .com domains being seized by US authorities not by pressuring the registrar, but by going straight to the registry.

List of ccTLDs

Below, I have listed all current ccTLDs and information about to what country the ccTLD belongs, from what country the ccTLD is actually controlled, and some notes.

Effective Control In is determined by the location of the company or entity that controls the ccTLD. For territories of other jurisdictions, Effective Control In is listed as the primarily controlling jurisdiction. For example, even though the British overseas territories enjoy a very high degree of independence, they are ultimately controlled by the United Kingdom. In some cases, a ccTLD is controlled from more than one jurisdiction. In those cases, the jurisdiction considered to have the most influence is listed. All jurisdictions involved in the control are instead listed under Notes.

I’ve also listed whether a domain is subject to registration restrictions. Hard restrictions refer to restrictions on residence, licenses, and so on. These can in some cases be circumvented by letting your registrar act as a local agent. Soft restrictions imply restrictions on certain types of content or words, usually referring to obscenity or things of an otherwise offensive nature. Nearly all ccTLDs come with restrictions on not being used for anything outright illegal. Enforcement of these restrictions and rules vary a lot.

This list is subject to change and may not be up-to-date even at the time of publishing.

Two weeks ago we were looking at the Cayman Islands. Today we travel west to a pair of islands called Saint Kitts and Nevis, a former British territory but today an independent nation.

A veritable must-have in the asset protector’s bag of tricks, this little nation is known for its LLCs, foundations, and notorious for its economic citizenship program, all of which will be discussed after a brief look at the history of the two islands and how they came to be what they are today.

History

Ceramics and weapons discovered on both Saint Kitts and Nevis indicate that the island were inhabited by hunter gatherers as early as 3,000 years B.C. These early inhabitants likely came from the northern parts of South America in what today is Venezuela. Saint Kitts was called Liamuiga and Nevis was called Oualie, meaning Fertile Island and Beautiful Waters respectively.

Recorded history begins in 1493 with Christopher Columbus sighting the islands during his second voyage. He gave Saint Kitts the name Saint Jago (Portuguese for Saint James) but mapmakers confused it and the island ended up being called Saint Christopher. The name Nevis comes from Nuestra Señora de las Nieves (Our Lady of the Snows) for reminding the sailors of snowy peaks back home.

A brief settlement attempt in the mid-1500s failed but in 1607 the first settlement was set up by an English captain named John Smith. This didn’t last and it wasn’t until 1623 that the English fully settled on Saint Kitts. A colony was set up under the leadership of Sir Thomas Warner after giving up trying to set up a colony in Guiana.

After a conflict between French and English settlers in 1626, the island was divided between into one French and one English part. The two went on to colonize other islands from their bases, the English colonizing Nevis, Tortola (BVI), Anguilla, and Antigua (Antigua and Barbuda).

In 1671, Saint Kitts joined Nevis, Anguilla, and Montserrat in the Leeward Caribee Island Government. This lasted until a French invasion of 1689, which the English ultimately fought back but which hurt the economy severely.

Tobacco had by this time become an important produce of Saint Kitts, while Nevis enjoyed profitable sugar plantations.

Sugar eventuellay took over ever in Saint Kitts and when the two were joined, following a tumultuous 18th century and beginning of 19th century, in 1871.

In 1967, Saint Kitts and Nevis became an Associated State of Great Britain. As we learned when reading about Anguilla, the two were in union on and off but broke apart finally during late 1960s and early 1970s.

For long, there had been a drive for autonomy on the island of Nevis and when Saint Kitts and Nevis gained independence in 1983, Nevis was granted significant independence although still a member of the federation of Saint Kitts and Nevis.

The sugar industry came to an end in 2005, thereby concluding a 365 years long tradition.

Today Saint Kitts and Nevis is a relatively prosperous nation, comparable to Panama and Uruguay in GDP per capita. It has a fairly diverse economy consisting of tourism, agriculture, international financial services, manufacturing and mining.

Overview

Map from Wikipedia.

Saint Kitts and Nevis Companies

Regulator

There are two branches of the financial services in Saint Kitts and Nevis. The Nevis branch and the Saint Kitts branch. Both ultimately fall under the Ministry of Finance.

Neither regulator is particularly responsive and their websites are often slow if at all accessible. This won’t affect those who merely seek to form a company or foundation but it can be a disappointing factor for those seeking to establish financial services on the islands.

General Information

Companies must be formed through a registered agent.

Limited Liability Company (LLC)

Modelled on various US LLC laws, the Nevis Limited Liability Company Ordinance (No. 1 of 1995) is probably the most popular offshore LLC jurisdiction in the world.

In a few weeks, I will be writing more in-depth about LLCs (although you can surely find much already written out there). In short, LLCs are pass-through entities (or flow-through entities, or tax neutral entities) meaning that they are while they are their own legal person, they are not in scope for any tax. They also do not have directors and shareholders, but instead members who can be managers or officers. Ownership is divided between members in accordance with a written agreement. This has the side-effect of shares not being at risk of confiscation.

The cost of forming an LLC is around 1,000 to 2,000 USD for the first year and around half of that in annual maintenance.

International Business Company (IBC)

The Nevis IBC is essentially just your run-of-the-mill, bare-minimum-restrictions IBC:

• No corporate tax
• One director minimum (can be corporate, can be shareholder)
• One shareholder minimum (can be corporate, can be shareholder)
• Minimum 1 USD paid-up share capital

The only quirk is that if there are three or more shareholders, the number of directors must be at least three. However, if there are fewer than three shareholders, the number of directors need only be equal to the number of directors.

Bearer shares are permitted but must be immobilized (deposited with a custodian).

Fees are comparable to LLC with many service provider charging a little bit more for IBC.

Foundation

Foundations are another major financial service in Saint Kitts and Nevis. The Nevis legislation dictates that foundations be multiform, meaning that foundation must elect at formation whether it is be treated as a company, a trust, a partnership, or as an ordinary foundation. This gives an enormous amount of flexibility.

The cost of forming a Saint Kitts and Nevis foundation vary enormously. Expect a few thousand USD minimum, all expenses covered.

Because of the great flexibility and relatively low cost, Saint Kitts and Nevis foundations are commonly used in asset protection structures.

Taxation

LLCs, IBCs, and foundations are exempt from tax in Saint Kitts and Nevis.

Costs

Without scraping the bottom of the barrel, you’re looking at around 1,000 to 2,000 USD for formation of an LLC or IBC and half of that in annual maintenance. IBCs often cost a little bit more than LLCs.

Public Records

Optional.

Record Keeping (Bookkeeping)

Required for LLCs, IBCs, and foundations alike. No annual filings are mandated.

Reputation

Since most of its usage in the international financial services sector is through LLCs, which aren’t necessarily perceived as tax evasion vehicles and because it lacks any significant banking sector, Saint Kitts and Nevis enjoys a mostly favourable reputation with little to no association with money laundering and other serious crime.

It’s still a tax haven, though.

Saint Kitts and Nevis Trusts

Trusts formed in Saint Kitts and Nevis are subject to great flexibility and the law contains preventive measures against forced heirship. In line with what one would expect of an offshore trust, foreign judgments are not recognized, meaning a civil court order in Saint Kitts and Nevis is requires to penetrate a trust.

Protectors are permitted.

Noteworthy Service Providers

As always, this is not a recommendation.

(L) = Licensed service provider, as of publishing this post.

• Asiaciti Trust (L)
• Beautmont (L)
• IFG (L)
• Meridian Trust Company (L)
• NTL Trust (L)
• Southpac Trust (L)

Banking in Saint Kitts and Nevis

The Saint Kitts and Nevis banking sector can best be described as lackluster. While there are six banks licensed in the federation, only one offshore bank is licensed: The Bank of Nevis International (BONI).

Most companies and trusts formed in Saint Kitts and Nevis bank elsewhere.

Saint Kitts and Nevis Economic Citizenship

Since 1984, Saint Kitts and Nevis has operated an economic citizenship program, called Citizen By Investment Program, where foreigners can receive citizenship by investing in the local economy. It is probably the world’s most prolific economic citizenship program and has withstood international criticism.

In short, an investment of at least 400,00 USD in a pre-approved real estate or a contribution of 250,000 USD in the Sugar Industry Diversification Foundation (SIDF) is required.

The final bill usually lands a bit higher than 400,000 or 250,000 USD when accounting for all administrative fees as well as additional costs for dependents.

It is generally not a problem to travel on Saint Kitts and Nevis passports but you may be subject to close inspection, second screening, or questioning.

Citizens are able to take up residence in Saint Kitts and Nevis and most but not all other Caricom countries.

See also The Ins and Outs of a Second Passport.

Living in Saint Kitts and Nevis

Quality of Life

It’s not as nice and comfortable as the Cayman Islands but the costs of living here are much lower. There is an enormous divide between rich and poor.

Crime is a concern but normal precautions are sufficient.

Taxation

There is no income tax in Saint Kitts and Nevis.

Immigration and Relocation

See above regarding citizenship.

Final words

Saint Kitts and Nevis plays a part in many asset protection structures. It offers no clear advantages for IBCs, save for situations where an above-average reputation is sought but for one reason or another British Overseas Territories are being avoided.

See also

• OECD Peer Review of Saint Kitts and Nevis (also has a list of TIEA and DTA)
• Financial Secrecy Index Saint Kitts and Nevis
• FATF documents on Saint Kitts and Nevis

Click here to see other posts in the Jurisdiction Spotlight series.

… And that you may find interesting.

License and Regulation

In order to form an offshore company, a local registered agent or trustee is required. You can (almost) always find a list of all licensed registered agents and trustees on the jurisdiction’s financial services commission’s (FSC) or financial intelligence unit’s (FIU) website. I’ve gathered an incomplete list here: https://www.streber.st/more/links/.

For example, if you are looking to form a company in BVI, only the entities listed here under Registered Agents are permitted to do so: http://www.bvifsc.vg/en-gb/regulatedentities.aspx.

Most offshore service providers (OSPs) are not licensed and instead have a partnership with one or more licensed registered agents and trustees whose services the OSP resells. You, as a customer, approach the OSP, pay them, send them your document, and they then pay their partner and pass on your personal information to them for incorporation. The registered agent forms the company and send all the document back to the OSP.

When it comes to pricing, the reseller has to pay its supplier, which in turn is paying the government fees. Both tiers of course have their own margins. However, there is no guarantee that prices are higher with a reseller OSP just because they have their margins and pays someone else’s margin. Registered agents will charge a reseller less than they would you directly because they reseller will take care of you as a customer. Licensed service providers are often law firms or accountancy firms, or otherwise have higher staff costs, which need not be passed on resellers.

Location

Because your OSP is probably not a licensed entity in the jurisdiction where you wish to register your company, form your trust, or establish your foundation, they are most likely not present there.

For the very (and perhaps overly) privacy-cautious, this can be a problem. You may be forming a company in the Seychelles but if your OSP is located in a low-secrecy jurisdiction and happen to have copies of your personal information and company information, this is a weak link in a structure that relies on confidentiality.

Be especially cautious about an OSP that doesn’t list an address or which just lists the address of its licensed partner.

Advisory vs. Sales

So many times, I’ve heard from people saying that they consulted with an adviser who told them to set up a Seychelles IBC and Belize bank account in order to avoid taxes, protect assets, and so on.

This almost invariably means that the person googled “offshore company belize”, clicked a couple of the top-10 results, and sent an email to the one with the nicest-looking website and lowest fees.

Let’s be clear about something. Most OSPs do not employ tax advisers, lawyers, accountants, or otherwise qualified professionals. The person answering your emails is not equipped to answer most of your questions regarding taxation or asset protection. They will just regurgitate a sales pitch they have been taught and push a package on you in a very one-size-fits-all kind of way.

You’re not necessarily guaranteed to be dealing with a qualified professional by going with a licensed registered agent instead of a re-seller.

This is a prime example of getting what you pay for (with exceptions). Chances are you won’t be talking to a qualified professional if you’re paying 600 USD for an IBC. A business wouldn’t be able to operate on such low margins while employing high-quality staff.

If you want to be sure you’re getting qualified advice, you are going to have to pay qualified-advice pricing. You can find law firms and accountancy firms in all offshore jurisdictions, many of which are also licensed registered agents. For example, Mossack & Fonseca, which are present in most corners of the world.

One-Man Operations

Because OSPs tend to operate behind offshore companies, it can be virtually impossible to find out who is behind the company.

From experience, I know that a lot of OSPs are one-man operations, meaning there is just one person operating under a company. This poses an enormous risk, in case that person for whatever reason becomes unable to operate the business. You suddenly have no one to turn to for support. Turning to the underlying licensed registered agent will only work based on the good will of the registered agent, as there is no previous agreement between you and them.

If your reseller goes away, the supplier has no obligation to help you.

Bank Kickbacks

When you open a bank account for your company, the OSP will charge you a fee of usually around a few hundred USD/EUR.

With a good OSP, this fee includes advisory on best bank suitable to you, handling of forms, certification of corporate documents, and of course a margin.

What is less spoken about is the kickback banks pay to OSPs for referring their clients. The kickback is either a fixed amount upon account opening or a percentage of fees earned on the client. Fixed amount kickbacks are usually in the area of a few hundred up to a couple of thousand USD/EUR, depending on type of bank and type of client.

The practice is ethically questionable. Can you be sure that your OSP is recommending the best bank for your needs or just the one with the highest kickback? Not all banks do this and not all banks that do it do it all the time, though, and short of asking your OSP (not that they have an obligation to tell you) there is really no way of finding out.

This is it. The final British Overseas Territory in the Caribbean.

Don’t worry. We will get to Guernsey and finally Jersey in a few weeks.

Let’s blow the dust off the Montserrat offshore sector and see what this lava-spewing volcano charming island has to offer.

History

Montserrat may have been settled as early as 4000 BC, but recorded history starts – as is often the case in the Caribbean and the Leeward Islands in particular – with Christopher Columbus in 1493. He named the island Santa María de Montserrat.

Not much happened for the next 139 years, when in 1632 the island came under English rule. Using slave labour, the English turned Montserrat into sugar plantations, rum distillation, and a handful of other productions. The slaves rebelled in 1768 but failed.

1782 through 1783, the French briefly captured Montserrat.

From 1871 to 1958, Montserrat was a part of the British Leeward Islands and from 1958 to 1962 a part of British West Indies after which it became a British Overseas Territory.

George Martin, well-known music producer, set up a recording studio in Montserrat in 1979. This became a popular studio for artists seeking the refuge and quiet of Montserrat.

In 1989, Hurricane Hugo swept in over Montserrat and devastated the island, which caused devastating damage to the tourism sector and all but destroyed the fabled recording studio. Nearly all of Montserrat was damaged in some way.

While recovery was under way, two more hurricanes swept in during the 1990s and it all culminated in 1995 when the volcano Soufrière Hills erupted for the first time in centuries. This destroyed the airport and harbours of the island and made the entire southern half uninhabitable. Even to this day, travel to the southern part of Montserrat is severely restricted.

A new airport was opened in 2005 in the unaffected northern part.

Today, Montserrat has a stagnant economy which relies heavily on subsidies from the UK, some 25 million GBP per year.

Overview

Map from Wikipedia.

Financial Services Regulator

The Montserrat Financial Services Commission is a surprisingly responsive regulator.

While legally capable, it is unclear whether the Montserrat FSA has the resources to fulfill requests for exchange of information as none have been filed yet.

Incorporation and Business

General Information

Montserrat has both IBC and LLC legislation. Laws are published on Montserrat FSC website.

International Business Company (IBC)

The Montserrat IBC Act was enacted in 1985. Modelled on the original BVI law, it is your typical IBC legislation with nothing noteworthy.

Bearer shares are permitted but must be immobilized (deposited with a custodian).

Limited Liability Company (LLC)

The LLC Act was enacted in 2000. It initially lacked recording keeping requirements but these were added in a 2002 amendment.

Montserrat permits single-member LLC.

Taxation

Both LLCs and IBCs are exempt from tax.

Costs

Costs are similar to BVI, being a little bit higher than most IBC jurisdictions.

Public Records

None.

Record Keeping (Bookkeeping)

Required by law.

Reputation

A 2014 peer review by the OECD classifies Montserrat as Mostly Compliant.

If someone know what and where Montserrat is, they will know it is a tax haven. It does not have any problematic connotations with financial crimes or otherwise.

Montserrat Trusts

Available but almost never used. The Trust Act contains a specific Exclusion of foreign law clause is included, which prevents forced heirship.

Protectors are permitted.

Banking in Montserrat

Montserrat as an International Banking Act, separating international from domestic banking.

There are four international banks, all subsidiaries of Panamanian banks:

• Banco Universal Trust Corporation
• Capital International Bank Inc.
• Global Bank Overseas Limited
• Lafise Bank Limited

There are two domestic banks:

• Bank of Montserrat Limited
• Royal Bank of Canada

Living in Montserrat

Quality of Life

The north part of the island is very nice. The southern part doesn’t have a lot to offer and can even be hazardous to your health.

Taxation

Personal income tax is quite high.

Immigration and Relocation

Under The Economic Residency Programme, investors can obtain residence permits in exchange for a 400,000 XCD (circa 150,000 USD).

Final words

There really isn’t much to say about Montserrat. The island is very, very beautiful and the people are friendly.

As a tax haven, though, it’s questionable how useful it is. I have not been able to identify any advantages over BVI, Anguilla, Turks and Caicos Islands, and even Cayman Islands.

See also

• OECD Peer Review of Montserrat (also has a list of TIEA and DTA)
• Financial Secrecy Index Montserrat
• FATF documents on Montserrat

Click here to see other posts in the Jurisdiction Spotlight series.

Time for another bank review.

1. First impressions
2. Fees
3. Opening An Account
4. Internet Banking
5. Card Products
6. Customer Service
7. Account Management
8. Other Services
9. Final Notes

Take particular note to that I will not be discussing the financial health of the bank. This is not a bank recommendation post. It’s a retelling of my experiences with a bank.

Today we will be talking about HSBC Hong Kong, in particular their commercial banking wing. Personal banking will not be addressed in much detail.

First impressions

It’s difficult to describe the first impressions of HSBC because it’s a bank that has been around for a long time, in a lot of countries, and which has always been an interesting player in offshore banking.

HSBC is one of the main banks in Hong Kong, covering everything from personal to small businesses to corporate to private banking. While the bank is nowadays headquartered in London, it is here that it was founded.

Interaction with HSBC Hong Kong is usually fast and efficient but more advanced queries can lead to slow response times; slower than other banks of comparable size. Delays of several days are not uncommon to email inquiries, but they should nonetheless be commended for almost never failing to answer.

Fees

Banking fees in Hong Kong are overall low and HSBC is no exception. Minimum deposit requirements are strictly enforced for the different account tiers, but non-compliance costs are tolerable.

Opening An Account

Opening a corporate account with HSBC Hong Kong is a very straight-forward process, for better or worse. It is more akin to an assembly line than a bank account opening.

This means that as long as you fit into one of a few models (local company, local company with foreign owners, regional company, BVI company), account opening is usually a breeze. If you have a more complex structure or just something they are not used to, you run a high risk of being declined. Going through a qualified introducer can make a big difference, though.

For personal accounts, the process is also highly streamlined.

Card Products

Foreign residents (companies and individuals) are very rarely issued anything other than China UnionPay. These cards will work in some ATMs worldwide, using the EPS or PLUS networks.

Those seeking Visa or MasterCard will be disappointed unless they are resident in Hong Kong or are on excellent terms with the bank since many years.

Internet Banking

The security is commendable with tokens required for logging in and for signing transactions.

The interface is starting to look a bit dated and navigation can be a bit cumbersome.

Most if not all of the features you could ask for in an internet banking facility are there.

Customer Service

Available around the clock in Chinese and English, but expect the English customer service to have a heavy accent and you will need to speak very clearly to make yourself understood. I have come across a number of cases where this has been a source of significant frustration.

The overall quality of HSBC Hong Kong customer service is good. They could be faster but if you are dealing with regular customer service (as opposed to having an account manager, see below), the service levels are in line with if not better than comparable banks.

Account Management

This is one aspect of HSBC Hong Kong which has not changed towards the robotic assembly line impression one gets from many other parts of the bank.

The highest levels of account management is of excellent quality.

Final notes

While I am not sure if the bank will still qualify for Best Offshore Bank in 2015, it is nonetheless a very good bank and a powerhouse in the offshore banking sector.

Recent scandals will likely make HSBC globally a lot more cautious for the immediate future.

While Montserrat was our last British Overseas Territory in the Caribbean, there is a lot left to explore in these warm, shallow waters.

Next on the agenda is the (in)famous archipelago of The Bahamas (or commonly just Bahamas), one of the true veterans in the offshore financial services sector.

History

This is going to be unusually brief due to time constraints. The history of Bahamas is a very interesting one and I may update this post in the future with a more thorough retelling.

While there is evidence of earlier inhabitants on the island, history in Bahamas begins with – who else – Christopher Columbus. The Spanish enslaved the population but the islands served no significant other purpose.

The French held the islands for some time the 1500s. English settlement began with settlers from Bermuda in 1648. Although the Spanish burned down these settlements, more English settlers arrived from Jamaica.

In the early 1700s, the French and Spanish teamed up to oust the English from The Bahamas. This was not entirely successful, although it did create a power vacuum which pirates used to set up base in Nassau. A pirates’ republic was proclaimed but not recognized by anyone. Many famous pirates’ legacies are linked closely to Bahamas: Blackbeard, Anne Bonny, Calico Jack, to name a few.

The English retook Bahamas a few years later and established a stable government except for a brief, one-year Spanish ownership of the islands in 1782 during the American civil war.

In World War I, nearly 2,000 Bahamian fought alongside British, Canadian, and American soldiers.

In World War II, Bahamas served as an important military base for submarine hunting in the and around the Caribbean. An airport was built to facilitate these efforts.

After the war, the newly built airport served as a catalyst to Bahamas’ rapidly growing tourism industry.

In 1973, Bahamas was granted full independence from the United Kingdom.

As a Tax Haven

Early history data based on History and success–financial services evolution by Ralph Deans, The Bahamas Investor, June 23 2009 (updated January 18, 2011).

In 1908, Royal Bank of Canada (RBC) became the first bank to set up shop in Bahamas. Over the coming decades, more Canadian banks joined. Swiss banks, which today hold a firm grip on the Bahamian international financial services sector, arrived in the 60s, spearheaded by UBS.

Bahamas grew as a tax haven in the 1930s and 1940s, drawing the attention of wealthy foreigners (largely Canadians) with its lack of taxation on wealth, income, and inheritance. This had not been an intentional move but rather a consequence of its history, with an economy successfully reliant on customs duties.

Some of Bahamas’ earliest law firms created during these formative decades are still around, such as Callenders (1903), Higgs & Johnson (1948), Graham Thompson (1950).

While by no means unique to Bahamas for the time, a blind eye was turned to tax evasion and money laundering until the late 1990s. After a number of scandals, a FATF/OECD blacklisting (more under Banking), and criticism following 9/11 (and alleged involvement by Bahamas-based Al Taqwa Bank), Bahamas’ reputation was hurt. Badly. IBC registrations dropped over 60% from 2000 to 2002.

Overview

Map from Wikipedia.

Incorporation and Business

Reputation

The Bahamas is in a peculiar situation. It’s difficult to categorize Bahamas’ reputation as good or bad. As we will touch on under Banking, the jurisdiction has been in recovery mode for a few decades to undo damage done to its reputation in the 1980s and 1990s.

Today, Bahamas strikes an interesting balance between compliance (being rated Largely Compliant by OECD) and privacy (implementing exchange of information under bilateral agreements only).

In short, it is a well-known tax haven but it is no longer associated with turning a blind eye to money laundering and other severe financial crimes.

Regulator

The financial services industry in Bahamas is regulated by the Bahamas Financial Services Board (BFSB).

The BFSB is responsive regulator which handles complaints, queries, and requests for exchange of information in a generally timely and correct manner. I have had a few encountered with BFSB and it’s been a positive experience every time.

General Information

While Bahamas offers a rather wide range of business entities, it is the IBC which stands for the vast majority of incorporations by international clients.

Bahamas is trying to position itself as a viable ecommerce hub. Until warehousing in and shipping to and from Bahamas becomes drastically cheaper, it is unclear what advantages it offers over other jurisdictions.

International Business Company (IBC)

The Bahamas IBC legislation is based on legislations written in the late 1980s and early 1990s. A substantial revision was done in 2000, which has since been amended a number of times.

It has all the bells and whistles one can expect from an IBC:

• Complete exemption from tax.
• No reporting requirements.
• Bookkeeping is required but need not be submitted.
• No paid-up share capital required.
• Shareholders not in public records, but – unusual for IBC – directors are on public records.
• One director, one shareholder – can  be the same person.
• Cannot trade within Bahamas.
• Re-domiciliation or continuance in other jurisdiction.

The costs of forming a Bahamas IBC ranges from around 1,500 to 2,500 USD and 1,000 to 1,500 in annual renewal. This is higher than most other IBC jurisdictions, which is one of the ways Bahamas tries to keep out the lowest hanging fruit.

Bearer shares are not permitted any more.

Foundation

A relatively new addition to the Bahamian financial services arsenal, The Foundations Act of 2004 saw Bahamas try to get in on the increased interest in foundations – then largely Panamanian and Liechtenstein (Stiftung) specialities. The finer details of foundations will be the topic for another day, but suffice to say that Bahamas has been able to use its newly-found mostly-positive reputation a useful tool in building a sizeable foundation industry.

Bahamas foundations are commonly used for tax planning or family wealth (including heritage) planning. Forced heirship is avoided by law.

Foundations must have assets valued at no less than 10,000 USD.

Taxation

There is no corporate tax in Bahamas but local companies may be charged a tax of up to 1.75% (0.75% for turnovers between 500,000 to 100 million USD).

Foundations are also exempt from tax in Bahamas. There are no license fees for foundations.

Public Records

Directors only.

Record Keeping (Bookkeeping)

Required but need not be submitted.

Trusts

Bahamas is a significant jurisdiction for trusts. Its laws are attractive for everything from asset protection, to tax planning, to inheritance planning, to charitable trusts.

Forced heirship is avoided by law. Protectors can be appointed.

Bahamas trusts are not in scope for any taxation in Bahamas.

Noteworthy Service Providers

As always, this is not a recommendation.

(L) = Licensed service provider, as of publishing this post.

• Butterfield (L)
• Higgs & Johnson (L)
• Morgan & Morgan (L)
• Mossack & Fonseca (L)
• Sovereign Group (L)
• Trident (L)
• Winterbotham (L)

Banking

The Central Bank of Bahamas describes offshore banking as a term used to describe banking activity in currencies other than the currency of the country in which the bank accounts are held. There used to be a time when Bahamas would actively market itself for its tight banking secrecy. For better or worse, those days are now gone.

Today, the Bahamian banking sector has positioned itself as light version of Switzerland. This is in part because of the magnitude of the operations of Swiss banks such as UBS, Credit Suisse, Pictet, and Julius Bär which have shaped the island nation into a significant wealth management jurisdiction.

However, transactional banking is common in Bahamas.

Banking Secrecy

If you come here after reading articles or even sales pitches about how tight the banking secrecy in Bahamas is, you’re going to be disappointed.

In 2001, both OECD and FATF placed Bahamas on a list of uncooperative jurisdictions and jurisdictions with problematic banking secrecy. Until that time, the banking secrecy in Bahamas had been comparable to Switzerland and Lebanon. While Switzerland and Lebanon resisted (and to this day continue to resist to some degree), Bahamas decided to surrender immediately and start complying with international standards.

And so they did, with gusto. Over ten new laws were enacted over the next year, addressing lapses in reporting, accounting, money laundering, and financial crime.

This was sufficient to satisfy FATF and to mostly satisfy OECD. It was also enough to satisfy US authorities and thereby avoiding a 30% penalty tax on all USD transactions, the dominant currency in the Bahamian offshore banking sector.

Banking regulations were tightened and brought up to modern standards. By 2003, Bahamas was removed from the blacklist.

Today, 13 years later, banking secrecy in Bahamas remains strong by current standards, but authorities are able to comply with requests for information.

Banks in Bahamas

There are seven commercials banks in Bahamas:

• Bank of The Bahamas International
• Commonwealth Bank
• Fidelity Bank Bahamas
• FirstCaribbean International Bank
• RBC Bahamas
• Scotiabank

There is one offshore commercial bank:

• State Bank of India

Lastly, there are 55 private banks and trust service providers. Some noteworthy examples include:

• Andbank Bahamas (Andorra)
• BSI Bank (Switzerland)
• Butterfield (Bermuda)
• Credit Suisse (Switzerland)
• Julius Bär (Switzerland)
• Lombard Odier (Switzerland)
• MMG Bank (Panama)
• Pictet (Switzerland)
• UBS (Switzerland)
• Winterbotham (Bahamas)

Bahamas Economic Residency

Instead of offering economic citizenship, Bahamas has an economic residency programme instead.

In exchange for a 500,000 USD investment in local real estate and some administrative fees (often reaching 10 – 15,000 USD), foreign investors can be granted accelerated residence permit.

An annual fee of 1,000 USD is required for each holder and another 25 USD per dependent.

Living in Bahamas

Quality of Life

Bahamas compares to Cayman Islands and Bermuda (not Caribbean but I’m including it anyway) in terms of quality of live and standards of living, although costs are generally lower.

However, many expats grow weary of the island feeling overly tourist-y. It’s very difficult to fully assimilate into society as a foreigner; a problem the other two mentioned jurisdictions do not suffer from.

Bahamas is well-connected to the world, either via direct flights or transfers in Miami. Until recent relaxation in US-Cuba relations, Bahamas served as a big stopover location for Americans going to and from Cuba for tourism.

Taxation

With no tax on income, wealth, capital gains, inheritance, and with significant exemptions available to real estate tax, Bahamas is extremely attractive.

Customs duties are high, as they serve as one of the government’s main sources of income (after tourism income and financial services license fees).

Immigration and Relocation

Short of coughing up 500,000 USD in real estate or getting a highly qualified job in for example financial services or medicine, it’s very difficult to settle down in Bahamas.

Final words

Bahamas offers a curious compromise between reputability, transparency, privacy of ownership, cost, and ease of engagement.

To those active in the industry, Bahamas’ efforts in the early 2000s are recognized and the jurisdiction is considered far more favourably than the likes of Seychelles, Belize, and even BVI.

To others, it is a tax haven – and rightfully so. But it is not a problematic one – any longer.

See also

• OECD Peer Review of Bahamas (also has a list of TIEA and DTA)
• Financial Secrecy Index Bahamas
• FATF documents on Bahamas

Click here to see other posts in the Jurisdiction Spotlight series.

So you just won a lot of money in the casino or have a steady income from poker or sportsbetting. Congratulations! You literally beat the odds.

Before you look into exotic solutions, carefully consider just having the winnings paid out to your local bank account. It’s a lot easier and if for example you reside in the EU and the winnings are from an EU-licensed gambling site, you may very well be able to take the winnings home free of tax.

But maybe tax isn’t the reason you seek some privacy regarding your winnings. Maybe you don’t want your significant other or family member to accidentally see your bank statement. Maybe you don’t want someone else to see your bank statement. Maybe you don’t want your bank to know your full financial standing. Whatever your reason – I am not here to pass judgment.

FAQ

Let’s get some basics out of the way.

Can Tax Authorities Compel Operators to Disclose Information?

Technically yes, either directly or by asking the local gambling authority acquire the information. In reality, there is no easy way for the typical tax authority to find out information from a gambling company.

Information held by gambling companies are not subject to regular exchange of information requests, though.

Do Gambling Companies Report Winnings?

The most popular gambling jurisdictions do not have such requirements. They instead rely on the gambling operator to keep records which are audited every year.

Newer licensing jurisdictions, whose licenses are just good for a single jurisdictions, may have such requirements.

Are E-Wallets Like Neteller and Skrill (Moneybookers) Required To Report Accounts/Balances?

Under current regulations and guidelines, e-wallets are not required to file any reports unless suspicious activity is detected on an account.

Can Authorities Compel E-Wallets Like Neteller and Skrill To Disclose Information?

Yes, tax authorities and financial conduct authorities alike.

Offshore Bank Account for Gambling

Now that’s a headline.

For some reason, you have decided that you want to open a personal bank account offshore  (forget about corporate accounts) to store your gambling proceeds.

Banks receptive to clients wishing to use their accounts for gambling withdrawals can be found in Cyprus (FBME used to be king, but obviously isn’t anymore), Malta (subject to strict KYC), Austria (high minimum deposits), Seychelles, Panama, Latvia, Moldova (very rare to open remotely), Mauritius (very touch-and-go), and Bahamas and several other Caribbean islands.

The actual account opening isn’t always straight forward, and depends on type of winnings.

Jackpot

If you won a big jackpot, your list of available banks may in fact increase and include Switzerland, Monaco, Andorra, and other wealth management centers. They will only agree to private banking and not act as financial conduits, though.

Alert the bank in advance about the incoming funds. Six, seven, or higher figure deposits are going to make any bank panic a little, especially going to a personal account. Expect to have to explain the origin of the funds, including the deposit you made to the casino in order to play whatever game you won the jackpot on.

In most cases, the gambling site will be happy to provide evidence of game rounds and proof that they are licensed themselves and that the games are vetted by reliable third parties. However, note that the gambling site itself cannot give you any financial advice. They might be able to refer you to someone, though.

Recurring Income

This is mostly for poker players and sportsbook/betting exchange punters, who have steady streams of income.

Whatever your reasons for wanting to withdraw your winnings to an offshore bank, it is often wise to pad the winnings by regularly moving savings in from another bank account. This shows the bank that you are using them for setting aside savings, and sometimes you withdraw winnings which also go towards saving. Of course, it also creates a trail between your normal income/finance and the bank account opened for gambling winnings.

Sooner or later, though, the bank is probably going to ask where the money is coming from. Prepare for this by keeping records of your play history. The bank won’t ever ask for or look through it, but this is a case of where having and being able to show can make a difference. Record keeping in and of itself

Withdrawing The Money

Here it’s important to build up a repertoire with the bank where you do not give them any reason to believe that the money is being laundered or were fraudulently obtained. The best is to keep the money idle for a couple of months.

This doesn’t apply to very large jackpots deposited into wealth management. Private banking works differently from regular banking in this regard.

Gambling Site → E-Wallet → Bank Account

This is the dream a lot of people have when they want to hide their poker winnings. The reality is that adding an e-wallet in the middle does nothing to significantly improve your financial privacy. As we discussed earlier, it is easy to get information from an e-wallet; easier than it is from a bank in most cases.

For one, regulators can more easily penetrate e-wallets thank bank accounts.

Secondly, many e-wallets are only protected by username and password, whereas banks in mature markets and increasingly in maturing markets have some form of two-factor authentication (PIN pad, SMS code, and so on). This makes it trivial to break into an e-wallet account. Although there are mechanisms in place to prevent outright there, your financial privacy has been breached already.

Many e-wallets will object to withdrawal requests to a bank account in another country than the country of residence of the e-wallet owner – even intra-EU/SEPA. Some only allow it after you have used a local bank account.

Gambling Site → Bank Account

Gambling operators rarely care where you withdraw funds to, unless it is to a regulated, sanctioned, or forbidden jurisdiction.

Examples of regulated jurisdictions include Italy, Denmark, Netherlands, and Australia.

Sanctioned depends on the location of the gambling operator but typically this is Iran, North Korea, and so on.

Forbidden jurisdictions are jurisdictions with an unclear legislation or which are simply not worth the risk of remitting gambling proceeds into, such as the US and Russia.

Stay clear of those types of jurisdictions and your gambling company will most likely be happy to wire funds anywhere. At most, they will ask for a bank statement for the new bank account (in addition to all the other usual KYC).

Today we continue our journey across the various British territories, today a British Crown Depedency, much like Isle of Man.

One of the two jurisdictions often referred to as the Channel Islands, the bailiwick of Guernsey consists of several islands, most notably: Guernsey, Alderney, and Sark. Each have their own parliaments.

Alderney and Sark will be touched on in this article but Guernsey is the main focus.

History

Guernsey was likely settled as early as 10,000 BC when the surrounding landscape looked very different from today.

Recorded history starts in the early 900s when Guernsey formed a part of Duchy of Normandy but the island pledged allegiance to France in 1204.

In 1339, the island fell into the hands of the Capetians and in 1372 to the Aragonese.

English influence grew as the British Empire expanded. When the English civil war broke out, nearly all of Guernsey sided with Parliamentarians, due to its affiliation with Calvinists. The Royalists of Guernsey were the last to capitulate.

The strategic location of Guernsey was important during wars between Great Britain and France and Spain.

Several important forts and castles were raised on Guernsey to keep it safe.

In World War I, some 3,000 Guernsey islanders fought in the British military.

In World War II, German troops occupied the Channel Islands. Many islanders were deported to Germany. A concentration camp was built on Alderney, the only one to be built on British soil.

After the war, Guernsey was returned to the United Kingdom and is today a crown dependency with its own parliament and own laws. it relies on United Kingdom for foreign relations and military.

Guernsey is neither a member nor an associate member of the European Union.

Overview

Map from Channel Teddy.

Incorporation and Business

Reputation

As the lesser known of the Channel Islands, Guernsey as a business location isn’t very well known outside of gambling. It’s a tax haven without any significant negative connotations. OECD has given Guernsey the rating of Largely Compliant.

It is a well known and reputable investment hub.

Regulator

The Guernsey Financial Services Commission (GFSC) is responsible for businesses that offer a financial service. It is a responsive and attentive regulator. The website is frequently updated. There is almost always someone available to answer the phone and emails rarely take more than a day or two to be responded; not rarely same-day.

The government also runs an initiative called the Guernsey Registry to promote company formation and business in Guernsey.

General Information

Incorporation in Guernsey for the purpose of forming a trading business is not very common. Most incorporations in Guernsey are as investment funds, holding companies, or related activities. The costs are high with final tallies often landing at several thousand pounds, despite modest government fees. The benefits over the likes of Gibraltar and even Isle of Man are unclear.

Guernsey Incorporation

Incorporation is regulated under The Companies (Guernsey) Law of 2008. Similar to BVI, a Corporate Service Provider (CSP) is required in order to form a company even for local companies (of which there aren’t many).

The available company types are: Limited Companies, Limited by Guarantee, Incorporated Cell Companies, and Unlimited and Mixed Liability Companies are permitted. The most popular is the Limited Company.

Companies must have a minimum of one shareholder and one director. Corporate ownership and directors are permitted. Ultimate ownership is however always disclosed to the registered agent and authorities are empowered to compel registered agents to disclose such information.

There are no requirements on local ownership or directors but one director must sign the memorandum, for which a nominee is often used.

A lot of effort has gone into simplifying the incorporation procedure, rarely taking more than a few days. That is, once you pass the rather onerous due diligence requirements most registered agents impose. It can seem unnecessarily daunting a task to form a company in Guernsey although it does (hopefully) protect the jurisdiction from involvement by elements the government considers undesirable (i.e. criminals).

Company names must end with Limited, Ltd, avec responsabilité limitée, or a.r.l..

Foundation

Foundations are new to Guernsey, the law being in 2013. It has been a well received piece of legislation due to the jurisdiction’s clean reputation and an increase in demand for foundations as asset protection and wealth management vehicles.

Taxation

Financial services are taxed at 10%, utilities providers are taxed at 20%, and companies with income deriving from real estate in Guernsey are subject to 20%.

All other companies are subject to 0% corporate tax.

Foundations are considered tax neutral.

Public Records

Directorship and other corporate information and filings are on public records, except for ownership.

For foundations, only information such as foundation number and address appear on public record.

Record Keeping (Bookkeeping)

Required but need not be submitted.

Companies with a turnover of less than 6.5 million GBP, net balance sheet less than 3.26 million GBP, and which have fewer than 30 employees may be exempt from audit requirements if shareholders so decide.

Trusts

One of the mainstays of the Guernsey financial sector, trusts in Guernsey go back to at least the 1600s. Modern laws were formed during the 1960s and 1970s and are today regulated under the The Trusts (Guernsey) Law, 2007.

Trusts can be perpetual and forced heirship is mitigated by Guernsey law superseding any other for inheritance purposes.

Protectors are permitted.

Income from a trust may be subject to Guernsey income trust if the trustees are Guernsey residents.

Noteworthy Service Providers

As always, this is not a recommendation.

(L) = Licensed service provider, as of publishing this post.

• Appleby (L)
• Carey Olsen (L)
• Jupiter (L)
• Trident Trust (L)

Banking

The Guernsey banking sector has been on a downwards trend 2005 – 2014 in number of license holders: 50 license holders have shrunk to 31.

Deposits are shrinking as well. According to the latest report, total deposits have decreased from just under 130 billion GBP in March 2012 to just over 80 billion GBP in December 2014.

The banking sector in Guernsey is in essence all about private banking. There is very little business or personal banking taking place here.

Banking Secrecy

None to speak of. Comparable to Malta in that it has professional confidentiality but no specific banking secrecy. Banking information can be disclosed under lawful requests.

Guernsey has signed up for the EU Savings Directive.

Banks in Guernsey

There are 31 banks licensed in Guernsey. Some noteworthy examples include:

• Butterfield
• Credit Suisse
• EFG Private Bank
• Lloyds

Alderney

Alderney is the third largest of the Channel Islands and is a member of the Bailiwick of Guernsey. Guernsey is responsible for most of Alderney’s non-domestic dealings, many of which are in turn handed over to the United Kingdom.

Alderney is mostly known for being an igaming (online gambling) jurisdiction. Regulated by the Alderney Gambling Control Commission, Many of the most well known operators and service providers are licensed (often one of several licenses across jurisdictions) here: IGT, Ladbrokes, Boyle, and so on.

Banking, trusts, and incorporation fall under Guernsey regulations.

Sark

Having kept its feudal system until 2008, Sark (opinionated article) is quite an oddity. But that’s not the point of discussion here.

Sark has its very own gambling laws, enacted in 2003. It is not a very popular jurisdiction, far behind Alderney.

Banking, trusts, and incorporation fall under Guernsey regulations.

Living in Guernsey

Quality of Life

Life in Guernsey is a life of moderately good weather on a small and isolated island tucked between the UK and France, closer to the latter than the former.

Communications to the outside world are quite poor, with flights limited to UK, Ireland, Jersey, Zürich, Geneva, Jersey, and Alderney. Summertime, a few flights to Germany are Netherlands are added.

Standards of living are generally high and costs of living are in line with the UK.

Taxation

Although lacking a number of taxes (VAT, capital gains tax, inheritance tax, wealth tax), there is nonetheless an personal income tax of 20%. This can be capped at 110,000 or 220,000 GBP per year depending on type and source of income.

Immigration and Relocation

Guernsey residency is available to Qualified Residents, who must fulfill certain criteria.

Because of its relationship to the UK, anyone with the right of abode in the UK can relocate to Guernsey. EU, EEA, and Swiss citizens have this right.For other nationals, residency in Guernsey can be taken up two other ways. One is by having close connections to Guernsey and show 500,000 GBP in capital or an income of at least 50,000 GBP.  What constitutes close connections is up to the authorities but typically includes having relatives living in Guernsey. The other way to obtain residency is by investment of 1 million GBP of which 750,000 GBP is invested in UK government bonds.

Final words

Guernsey is a fine jurisdiction for trusts and foundations. Although contracting, the banking sector is still quite strong with many fine institutions available.

For business, Guernsey has a long way to go to compete with the likes of Jersey, Isle of Man, and Gibraltar.

See also

• OECD Peer Review of Guernsey (also has a list of TIEA and DTA)
• Financial Secrecy Index Guernsey

Click here to see other posts in the Jurisdiction Spotlight series.

Note that this article compares concepts across different legal systems and jurisdictions, which invariably is prone to flaws. As always, exercise due caution and seek qualified advisement. Furthermore, I am going to glance over some business concepts that you shouldn’t come here to learn. Wikipedia and Investopedia are good places to start if terms here are unclear.

For a long time, Saint Kitts and Nevis has completely dominated non-US offshore LLC formations. However, in recent months and years, two alternatives have cropped up: Anguilla LLC and, to a lesser degree, Belize LDC.

Therefore, it’s time to discuss the differences between International Business Companies (IBCs), Limited Liability Companies (LLCs), and also take a look at a few other.

Before we start breaking down IBC, we need to understand what a private company limited by shares (Limited or LTD for short) is since IBCs are closely related to it. But before we can do even that, we (you) need to understand something very fundamental:

What Is a Company?

While similar concepts go back very far in history, companies as we view them today first appeared in English laws passed during the 1600s and 1700s as a way for investors to invest in the rapidly growing trans-Atlantic trade with limited liability and shared ownership.

Things have changed since then but limitation of liability was one of the reasons the laws became so enormously successful.

Person

Companies are persons. This wasn’t always the case.

The term legal person is often used to define a company. While it is true that all companies are legal persons, not all legal persons are companies. There are other persons, namely natural persons, examples of which would be you and I – humans.

More precisely, companies are juridical persons but the distinction between legal and natural person is rarely required which is why the terms have essentially become interchangeable.

Liability

What does this all mean? Being a legal person means that a company has many of the legal rights that natural persons have: they can enter into contracts, acquire credit (and debt), sue, and so on.

If you lend someone 1,000 EUR and they don’t pay back, you can (in theory) sue them for the money.

If you lend a company 1,000 EUR and the company doesn’t pay you back, you can sue the company but you cannot sue the directors or shareholders unless they have engaged in criminal negligence or other criminal activities – and even in those cases, it’s the directors rather than the shareholders that are most at risk.

This protects shareholders from liability. They are only liable for whatever share capital they own. Creditors cannot go after shareholders personally. (Again, presuming no severe crime has been committed.) While this might be something you take for granted, it hasn’t always been the case and I still see people engaging in business activities without forming a company, thereby becoming personally liable which in turn means creditor can go after the entrepreneur’s personal assets.

This is what the word limited stands for in phrases like private limited company or public limited company. In LLC, it’s even more obvious: Limited Liability Company.

Ownership

Companies are owned by someone. While individual companies may be owned by other companies, there is always one or more natural persons who are the ultimate beneficial owners (UBO for short) of a company. UBO is often defined as someone who owns 20% or 25% interest in a company.

How is ownership decided? In the case of typical companies, it’s shares (or stocks), which as we mentioned above is the shareholders’ liability. The more shares someone holds, the more of the company they own.

Companies have what’s called a share capital, which for an IBC is often 100,000 USD divided into 100,000 shares. Share capital in whatever currency unit you have chosen need not correspond to the number of shares on a 1:1 ratio, meaning it’s possible to have a share capital of 100,000 USD but only issue 2,500 shares, each valued 40 USD. More complex divisions are possible but I won’t go into that here.

Different legislations have different requirements on so-called paid up share capital. In Switzerland, for example, the paid-up share capital is 100% for a GmbH or 50% for an AG company. This means that all of the share capital needs to be deposited into a bank account (or guarantees provided that the funds are available) in order to form a GmbH but only 50% if forming an AG entity.

Things become a lot trickier for public companies whose shares are traded on a stock market.

IBC

IBC – International Business Company, named so after the International Business Company Acts under which they are incorporated – are for all intents and purposes private limited companies as described above.

They have directors, shareholders, share capitals, limited liability, and all the other bells and whistles of a regular company. What sets them aside from regular companies are things like:

• Directors not on public record.
• Shareholders not on public record.
• One director and shareholder minimum (and in many cases the same person assumes both roles).
• No corporate tax at all in the jurisdiction or IBCs exempt from corporate tax (ringfencing).
• Cannot trade with locals or becomes liable for tax if trading with locals.
• Limited-scope accounting requirements.
• Very lax regulations on disclosures and filings.

Note that not all of these attributes apply to all IBC jurisdictions.

LLC

So what puts LLCs apart from regular private limited companies?

LLCs arguably date back to the late 1800s with inspiration by various European laws but the LLC as it is known today was first entered into law in Wyoming, USA, in 1977. There is a great degree of overlap between LLC and partnerships, which is why the concept of single-member LLC is not always available. Some US states require a more that LLCs have more than one member.

Here is a breakdown of differences and similarities between private limited companies and LLCs.

Ownership

Ownership of LLC is defined as per the founding agreement, either as a defined percentage or as membership units (which are similar to shares or stocks).

The main difference here is that an LLC can change its ownership much more flexibly than a regular company without regarding to paid-up capital.

As an example, two entrepreneurs (Bob and Jane) invest 10,000 USD each in a company. However, because Bob is mostly an investor and adviser whereas Jane will be doing all the work, they decide that Jane should own 75% of the company.

LLCs with membership units can have several types of units, with some units counting more than others. For example, in an LLC with ten members, each member may be assigned 10 membership units but members who contribute more (money, time, knowledge, or other) are given 10 membership super-units that count twice as much.

And so on…

LLC ownerships is very flexible. While this can be good from an operational point of view, it makes many banks a bit anxious when dealing with an LLC. Opening a bank account for an offshore LLC can be marginally more difficult than for an IBC.

Public Records

LLCs are traditionally very secretive entities. One popular usage of this in the US is to buy real estate in for example New York and concealing identities behind LLCs.

What goes on public record varies between states in the US and between jurisdictions internationally. The likes of Saint Kitts and Nevis do not put anything on public record, whereas in the US it’s often possible to verify the existence of an LLC but not to get the details of members and – even less commonly – ownership.

Taxation

It is sometimes stated that LLCs are tax-free entities. This is technically incorrect. LLCs are or can (and virtually always do) opt to be treated as pass-through entities (also called tax neutral entities or look-through entities). This means that corporate income tax does not apply at all to LLCs (with exceptions).

Instead, members are taxed on personal income. If Bob and Jane’s LLC takes out a profit of 100,000 USD, Bob needs to add 25,000 USD and Jane 75,000 USD to their next tax return under personal income.

In the case of an offshore LLC, this would mean that profits are passed on directly to you and on your next tax return in your country of residence, the income from the LLC should be included as income.

LLC Jurisdictions

This is a non-exhaustive list of onshore and offshore LLC jurisdictions.

• Anguilla
• Belize (Limited Duration Company)
• Cook Islands
• Delaware, US
• Dubai, UAE
• Liberia
• Marshall Islands
• Nevada, US
• Panama (SRL, similar)
• Ras al-Khaimah, UAE
• Saint Kitts and Nevis
• Wyoming, US

Others

LLP

Unlike in a General Partnership (GP) or a Limited Partnership (LP), where one or more or all members have full liability, Limited Liability Partnerships (LLP) are partnerships where members’ liabilities are limited.

The UK LLP is probably the most popular LLP. Similar to an LLC, it is a tax neutral entity.

A minimum of two partners are required.

I will go into more detail in an upcoming Jurisdiction Spotlight article about the UK.

SRL

SRL is another company type which is (or can be) closely related to LLC. It’s short for Sociedad de Responsabilidad Limitada (Spanish), societate cu răspundere limitată (Romanian), or Società a Responsabilità Limitata (Italian).

SRL is distinctly different from the SàRL (Société à Responsabilité Limitée), despite similar name, which exists in most French-speaking countries and a handful other.

The Panamanian SRL is arguable the closest any SRL is to being an LLC.

More on Panama next week…

The time has come to take on one of the most requested and most misunderstood jurisdictions: Panama.

In this article I will tell you why incorporating in Panama is probably not what you thought it was and why you probably are going to need a lot of painkillers to get through the hassle of opening a bank account there.

But it’s still an exciting jurisdiction, so let’s dig into it.

Overview

Map from Wikipedia.

Incorporation and Business

General Information

Contrary to popular belief, there is no such thing as IBC in Panama. I cannot make this clear enough. A lot of service providers are marketing Panamanian IBC. No such thing exists.

As we learned last week, IBCs are in essence regular companies (or corporations) with special attributes such as secrecy of directors and shareholders, and total tax exemption. Instead in Panama, there are two popular types of companies: the Sociedad Anónima (SA) and Sociedad de Responsabilidad Limitada (SRL). SA are very similar to private limited companies and SRLs are comparable to LLCs.

Forming a company in Panama is generally cheap and fast. Incorporations often cost under 2,000 USD even with higher-end providers. Under 1,000 USD is possible with budget providers. Time-frame is usually just a matter of days but this can be subject to enormous fluctuation.

However, an often-forgot aspect of incorporating in Panama is the need for nominee directors for those seeking confidentiality. This can easily add another 1,000 USD and more for formation and annual renewal.

Reputation

Panama has a challenging reputation. On the one hand, it is a fairly large economy and with the Panama Canal it plays an important role in international trade. It is not a pure high-secrecy tax haven like so many others, but despite similarities in its legal framework it does not achieve the same level of prestige as Hong Kong.

Although there are public records, nominees are so prevalent it is more or less assumed that non-resident-controlled Panamanian companies are secretive. There are also some concerns raised regarding the lax nature of annual filings and audits.

Roughly speaking, a Panamanian company looks better than a company incorporated in the likes of Vanuatu, Seychelles, Dominica, and Belize. It is more akin to Bermuda and – arguably – even Cayman Islands despite the higher secrecy.

Regulator

There is no regulator in the sense specialized tax havens such as BVI and Bahamas have. Companies are regulated under different laws, primarily Ley 32 de 1927 (Law 32 of 1927) for SAs and Ley 4 de 2009 (Law 4 of 2009) for SRLs. The latter was a much needed update to laws written in the 1960s that didn’t see much traction.

SA – Sociedad Anónima

Requirements:

• Three directors.
• One shareholder (corporate shareholders are permitted).
• 1 USD paid up share capital.
• One secretary.
• Registered address in Panama.

Corporate shareholders and directors are permitted. For corporate directors, full details about the directors of the corporate entity must be disclosed. The due diligence process is quite exhaustive for foreign-registered corporate directors.

Bearer shares are permitted but must be deposited with a custodian (immobilized).

Taxation

SAs are taxed on a territorial basis, much like Hong Kong. Income accrued from outside of Panama are not in scope for Panamanian corporate tax (which currently stands at 25%, down from 30% in recent years).

SRL – Sociedad de Responsabilidad Limitada

Requirements:

• Two members (corporate members are permitted).
• No minimum capital.
• Registered address in Panama.

Taxation

Like LLCs, SRLs are tax neutral and members are instead taxed on personal income. Non-resident members of an SRL are not in scope for tax in Panama but may and very likely are elsewhere.

Public Records

Contrary to popular belief, directors and shareholders (optional) are on public records for SAs and members for SRLs.

Such records are held by the Registro Publico. While there are indications that the page is available in English, translations are in reality severely lacking.

As there is no corporate secrecy to speak of in Panama, nominees are commonly used to act as directors, shareholders, or members and officers.

Record Keeping (Bookkeeping)

Required but need not be submitted in most cases. Audits are rarely required.

Panama Private Interest Foundation (PPIF)

Panama is one of the two main foundation jurisdictions; the other being Liechtenstein upon whose laws Panama based its. Structured correctly, it is one of the strongest asset protection vehicles in the world. It can also offer significant tax benefits at a relatively modest premium.

No, paying a service provider a few thousand dollars for a Panamanian foundation will not protect your assets or legally reduce your tax burden. It needs to be done right.

A Panamanian foundation is founded by one or more founders who each contribute at least 10,000 USD to the foundation. The foundation forms its own estate, i.e. it assumes ownership of the contribution (assets).

Day-to-day management of a foundation is undertaken by the foundation council. In many cases, this is an entity which is owned by nominees or, in more advanced situations, by paid full-time managers. (The difference being that nominees are essentially passive.) Some opt to have a protector which is a person or designated legal body whose approval the foundation council must seek before deciding on how to manage the foundation’s assets.

Lastly, there are beneficiaries, who are the persons (natural or juridical) for whose benefit the foundation was created. This cannot be the founders, similar to how a in a trust the beneficiary cannot be the settlor.

Foundations are legal entities and can for example own property and undertake many but not all of the rights and privileges of a corporation.

No tax is levied on foundations other than 300 USD annual franchise tax. The costs of forming and running a foundation arise from administrative fees. Expect around 4 – 6,000 USD for formation and 3 – 4,000 USD for maintenance of the foundation. Maintenance of the assets can itself incur other fees (private banking).

Noteworthy Service Providers

As always, this is not a recommendation.

• AFRA
• Alcogal
• Cambra La Duke
• Icaza Law
• Morgan & Morgan
• Mossack & Fonseca
• Pardini
• Trident Trust

Banking

The Panamanian banking sector is onerous and lagging. For reasons that remain unclear, Panamanian banks think they are the greatest gift to the international banking sector. This must be because you so rarely see Panamanian representatives at international banking conferences because there is nothing spectacular about banking in Panama any more.

The banks are taking due diligence to such an extreme that it surely detracts dozens of legitimate applicants for every truly high-risk customer.

Below is a non-exhaustive list of documents different banks in Panama have asked for as a part of opening an account for legitimate customers (in addition to all the usual documents required to open an offshore account):

• Police conduct report;
• Reference letter from employer;
• Grades from middle school, high school, and university diplomas;
• Reference from a doctor;
• Boarding card for flight into Panama;
• Flight ticket for departing Panama;
• Birth certificate;
• Latest tax return.

Banks in other jurisdictions from time to time go a bit overboard with the due diligence process, but no compliance departments are as creative as Panamanian ones.

Much of this doesn’t apply to wealth management. I have seen examples of accounts being opened with just a passport and showing an account statement from their bank through a mobile app.

Panama lacks a central bank. Its banking sector is largely market-driven but oversight is provided by the Superintendencia de Bancos de Panamá (Superbancos or SBP). This is no doubt a contributing factor to why banking in Panama is such a mess.

Something SBP does very well, though, is present information about banks in Panama such as a nicely consolidated list of credit ratings of Panamanian banks.

Now, I don’t mean to say that banking in Panama is bad. The process of opening an account is but once approved, banking in Panama is fairly straight forward and thanks to modernisations a number of years ago, the banks still look and feel fairly modern. Wire transfer speeds are generally acceptable and the compliance burden is relatively mild with the better banks. Expect to be asked for invoices and proof of payment from time to time, but not beyond what is normal in international banking nowadays.

Banking Secrecy

Panama was notorious for its banking secrecy until 2009, when OECD placed the republic on a list of uncooperative countries. The response was cautious from Panama but it started signing more tax treaties to appease the OECD. This wasn’t enough to US authorities and Panama capitulated in 2011 when it signed an agreement with the US which gives US authorities essentially unlimited access to information held by Panamanian banks.

For non-US persons, Panama still has a relatively strong banking secrecy. Panama is able to comply with requests for information under tax treaties (TIEA/DTA), though.

Banks in Panama

There are 94 licensed banks in Panama.

State-Owned Banks

• Banco Nacional de Panamá
• Caja de Ahorros

These banks are typically not involved with non-resident companies.

General Licenses Banks

There are 50 banks licensed under this license scheme, which may or may not engage with non-resident companies, provide wealth management, and otherwise take on international clients. Some noteworthy examples include:

• Balboa Bank
• Banistmo (formerly HSBC)
• Banvivienda
• Bladex
• Citibank
• Credicorp
• MMB Bank
• Multibank
• Tower Bank

International License Banks

As the name implies, these are foreign-owned banks designed for international banking services. Banks here are essentially either wealth management banks or banks that engage with offshore companies and PPIFs. Out of 28 license holders, the following are noteworthy:

• Andbanc (Andorra)
• Banca Privada d’Andorra (Andorra) – as of writing under control by authorities in Andorra and Panama.
• BSI (Switzerland)
• Crèdit Andorrà (Andorra)
• PKB (Switzerland)
• Popular Bank (Dominican Republic)

Representative Offices

Among these 14 banks, we find such well-known names as:

• Commerzbank (Germany)
• Credit Suisse (Switzerland)
• Julius Bär (Switzerland)
• Lombard Odier (Switzerland)
• Safra Sarasin (Switzerland)
• Saxo Bank (Denmark)
• UBS (Switzerland)

Living in Panama

Quality of Life

Varies depending on where in the country you set up base but most foreigners end up in the major coastal cities, mainly Panama City and Colón. Costs of living are much higher here, especially Panama City, but still well below comparable cities in wealthier nations.

Panama is generally safe but there are of course areas to avoid, whether it be due to crime or perils of nature.

Communications and infrastructure are probably the best in the region.

Taxation

Territorial taxation applies to personal income, meaning that income arising from outside of Panama is exempt from tax. The tax authorities aren’t as easy-going with personal income as with corporate tax, meaning it’s wise to be especially diligent about keeping records to prove the origin and source of funds if need be.

Aside from that, Panama has medium to low taxes. There is no inheritance or wealth tax, but there are a number of capital gains taxes. Sales tax ranges from 7% to 15%.

Immigration and Relocation

In 2012, a law (Executive Decree 343) was passed meant to attract foreigners to Panama. Under this law, persons from  specially designated countries can set up base in Panama very easily. These are countries with which Panama has strong friendly ties and include:

• Argentina
• Australia
• Austria
• Belgium
• Brazil
• Canada
• Chile
• Czech Republic
• Finland
• France
• Germany
• Ireland
• Japan
• Netherlands
• Norway
• Singapore
• Slovakia
• Spain
• Sweden
• Switzerland
• USA
• Uruguay

To qualify, a person must be a national of any of the above, deposit 5,000 USD into a Panamanian bank account (plus 2,000 USD for each dependant), and to show some form of economic activity in Panama. The latter is often achieved by forming a Panamanian company. The company cannot merely be a dormant entity but must show some degree of activity and it is up to Panamanian authorities to determine if these activities are adequate. From what I have seen, the authorities are currently being very lenient. It is not necessary to live in Panama to get this residence permit.

If approved, you and any dependants become a Permanent Resident of Panama and are issued a cédula (national ID card).

The entire process can be quite quickly executed if due preparations are made in advance and you have a law firm helping you on the way. A visit to Panama is required and it is wise to set aside at least a week. All in all, I have seen the process executed for well under 10,000 USD for single individuals.

Another option is an investor visa which requires a deposit of 160,000 USD.

Attaining Panamanian citizenship is not entirely as easy as it comes with residence requirements.

Final words

Panama is an excellent jurisdiction for incorporating in a medium-reputable jurisdiction. It looks best if Panamanian companies bank in Panama and make sure you have all your ducks in a row before approaching one of the fine financial institutions based there. Having a good introducer will help significantly and is in many cases required for non-residents.

Life in Panama can be very comfortable and with easy-going immigration, it is no wonder it has become a popular destination for international entrepreneurs, permanent travellers, and other.

See also

• OECD Peer Review of Panama (also has a list of TIEA and DTA)
• Financial Secrecy Index Panama
• FATF documents on Panama

Click here to see other posts in the Jurisdiction Spotlight series.

This article was written before the recent developments in the US-Cuban relations, which may lead to greater financial freedoms in Cuba.

Banking Sector

There is very little information available on the Cuban banking sector and spending time in and around Havana didn’t shed a ton of light either. Beautiful city, though, with some of the best mojitos I’ve ever had.

This is one of few countries with two currencies: one called convertible peso and one called just peso. The convertible peso is pegged 1:1 with USD. The banking sector is flush with EUR and other international currencies.

While you might think that so many currencies coming together would lead to something good, Cuba has the least developed banking sector in the entire Americas. Two things still attract foreign investors: the local economy and indirect secrecy.

Most Cuban banks have SWIFT BICs and are (or should be) able to directly send wire transfers.

There are nine commercial banks licensed in Cuba:

• Banco Nacional de Cuba (BNC)
• Banco de Crédito y Comercio (BANDEC)
• Banco Popular de Ahorro (BPA)
• Banco Exterior de Cuba (BEC)
• Banco Financiero Internacional (BFI)
• Banco Internacional de Comercio S.A.
• Banco Metropolitano S.A.
• Banco de Inversiones S.A.
• Banco Industrial Venezuela – Cuba S.A.

Now, because Cuba for so long has been so isolated, not all banks have websites and if they do they are often outdated, have a distinct early 2000s feel, and/or are extremely bare bones. This is improving but, again, Cuba is far behind the rest of the Americas. Since I took the time to document my experience with each bank, let’s go through them one by one.

Banco Nacional de Cuba (BNC)

State-owned bank. The name might be familiar, as they tried to extract over 9 million USD from Chase Manhattan Bank in the 1980s.

No website. Effectively a part of the central bank.

Banco de Crédito y Comercio (BANDEC)

BANDEC does have a website, hosted by a third-party: http://www.santiago.cu/hosting/bandec/

The bank holds a fairly impressive range of correspondent accounts.

There is no internet banking facility available, but I was told by BANDEC that instructions and inquiries can be sent to the bank by phone, email, and fax. The fee structure is nothing short of disastrous, but after crunching the numbers it turns out to be cheap as long as the number of transactions are low.

I left the bank with a piece of paper containing my account numbers, correspondent account information, and two laminated business cards: the bank manager and a customer service representative. To open an account, all they asked for was passport and visa.

Banco Popular de Ahorro (BPA)

This bank has a website: http://www.bpa.cu/?mod=Inicio

With over 200 branches, BPA is one of Cuba’s largest banks.

If it doesn’t load, try again later or try to go to the Product and Services page directly. It’s extremely sporadic.

The bank is effectively limited to CUP, EUR, and CAD due to a rather narrow selection of currencies from their correspondent accounts. They claim to support other currencies but in reality it will be converted to one of those three currencies. I found that Cuban banks generally exaggerate their international financial reach.

While all banks claim to have internet banking “coming soon”, BPA is the one I’d consider most likely to launch it.

As with BANDEC, fees are low.

Banco Exterior de Cuba (BEC)

No website.

Banco Financiero Internacional (BFI)

No website.

Banco Internacional de Comercio S.A.

International bank of commerce. This bank has got to have a website, right?

Wrong.

Very nice head office in central Havana, though.

Banco Metropolitano S.A.

No, not even the metropolitan bank has a website.

Banco de Inversiones S.A.

Inversiones, if you do not speak Spanish, means investments. This is the republic’s only investment bank. It does have a website, even in English. As of writing, their latest annual report is from 2011, which showed assets of some 171.4 million CUP (circa 7.4 million USD).

Banco Industrial Venezuela – Cuba S.A.

BIV is a large bank in Venezuela, which not too long ago opened up in Cuba as a part of strengthening trade between the two nations.

Banking Secrecy Cuba

Banking secrecy in Cuba is governed by Resolucion No. 66 de 1998.

This piece of legislation gives virtually no protection against Cuban authorities snooping around. In fact, it is a significantly weak banking secrecy legislation.

However, because Cuba has such problematic international relations and its internal authorities are poorly coordinated, any request for information is likely to be denied or never materialize. Residents and/or citizens of countries with which Cuba does not have good relations are unlikely to have their Cuban financials disclosed. While Cuba has signed ten tax treaties, they are outdated and untested.

The downside is that, well, you would be banking in Cuba.

This type of banking secrecy is sometimes referred to as indirect banking secrecy or hostile banking secrecy, where the secrecy is not so much guaranteed by law but rather guaranteed by non-compliance and non-cooperation. It is far less tolerated than legislated banking secrecy.

Cuba has made attempts to attract foreign investors as well as clandestine foreign investors (i.e., money launderers) but has never successfully done so. It has either been beaten out by more established players or caved at the slightest sign of US pressure.

Investing in Cuba

Now, this blog is not about personal finance or tips of asset diversification.

Basically, my conclusion is that there isn’t a whole lot to achieve here that you couldn’t from abroad. The domestic economy is still very much in poor condition and there isn’t much trade, with enormous socialization of everyday needs.

Non-Banks

Sending money in and out of Cuba is largely done through regulated or unregulated money remittance companies.

In Conclusion

Banking in Cuba is severely underdeveloped and to a non-resident foreigner almost a novelty.

It is possible to open bank accounts for foreign companies in Cuba but it’s a process few have the patience to endure.

Jersey marks the last stop across the British-owned tax havens. Some might argue for the Pitcairn Islands but in reality – no, it’s not much of a tax haven.

The larger of the two bailiwicks that make up the Channel Islands, Jersey has a lot in common with Guernsey but has a few little quirks of its own.

It is one of the world’s foremost trust jurisdictions.

Overview

Map from Wikipedia.

Incorporation and Business

Reputation

Conversations typically go one of two ways when Jersey is brought up:

“No, not New Jersey. Jersey.”

“Oh, I’ve heard of that, I think.”

Within the financial services sector, Jersey enjoys an excellent reputation. It is a well known, well established, and trusted jurisdiction for trusts, banking, and company formation (in that order).

Outside of the financial services sector, Jersey is a known tax haven but not a nefarious one, much like Isle of Man, Gibraltar, and Guernsey.

Regulator

Jersey FSC oversees the financial services sector in Jersey. Don’t let its eerily outdated-looking website deceive; Jersey FSC in fact offers what is expected of a modern FSC: responsiveness, frequent update, and presence at major international conferences.

The Jersey FSC works hard to keep up Jersey’s strong reputation. Its AML/CFT handbook is in many ways an industry staple.

General Information

Although there are several different types of legal entities, the most common for business uses are private limited companies formed under the Companies (Jersey) Law 1991, although the Limited Liability Partnerships (Jersey) Law 1997 is seeing increased usage.

Were it not for the high cost, Jersey would compete with Gibraltar in terms of reputability and ease of forming a business. As it stands, its closest competitor is the (in many aspects) larger Isle of Man, and the smaller Guernsey.

Jersey Incorporation

Forming a company in Jersey requires the following:

• One director (must be a natural person; need not be resident).
• Two shareholders (need not be resident).
• 1 GBP paid up share capital, usually with an authorised share capital of 10,000 GBP and 10,000 shares.
• Company name must end with Ltd, Limited, a.r.l., or avec responsabilitè limitèe.
• Secretary is optional.

Forming a company in Jersey usually just takes a matter of days and costs are usually in the vicinity of 2,000 to 3,000 GBP for the first year and around 2,000 GBP for annual maintenance – not counting auxiliary services such as nominees (popular to prevent disclosure of directors and in some cases even shareholders) or bookkeeping.

Taxation

Taxation is determined by residence. A company is not resident in Jersey if its management and operations are outside of Jersey or if it is tax resident elsewhere.

Non-resident companies are taxed on income arising from within Jersey only, which in practice means zero taxation owed in Jersey.

Despite this, the standard corporate tax rate is 0%. Higher rates exist for financial service companies (10%) and utilities (20%).

Public Records

Companies, their annual returns, and some details such as identities of directors are on public record.

Record Keeping (Bookkeeping)

Required by law.

Private companies and LLPs normally opt out of audits, whereas public companies are required to be audited.

Foundations

Although a far cry from the likes of Panama and Liechtenstein, Jersey has worked up a fairly robust reputation as a strong jurisdiction for foundations in just a few short years.

Opinions vary about the advantages of the relationship to the UK with Jersey being all but independent yet answerable to the UK (to some degree). Those who seek the reputability that arguably comes with a jurisdiction having close ties to the UK often find that Jersey is among the most attractive for foundations.

There are no other significant differences that would set Jersey foundations apart from its counterparts in Panama and Liechtenstein.

Trusts

Drawn to the island’s centuries of political and social stability, especially in the most recent one and two, and for its stellar reputation in international financial services, Jersey is one of the largest trust jurisdictions in the world.

Forced heirship laws are mitigated by law. Only Jersey courts apply to a Jersey trust (provided the trustees are resident in Jersey). Protectors are permitted.

There are five different types of trusts commonly used in Jersey.

Accumulation Trust

These are trusts set up usually for the benefit of someone else, such as a child, grandchild, or other. Accumulation trusts have a perpetuity of 100 years.

Often set up as a wealth planning vehicle, an accumulation trust can be used for the purpose of benefiting future generations to help pay for example tuition or purchase real estate.

Discretionary Trust

In a discretionary trust, general directions are provided by the settlor which leaves the trustee in greater power to manage the wealth using their own discretion. These are often used for wealth management where a private banker takes control of wealth on behalf of a client.

Fixed Interest Trust

Grossly simplified, fixed interest trusts are wealth management trusts. Assets are deposited into the trust for a specific purpose (interest), for example paying grandchildren an annual allowance until they reach the age of 18.

Purpose Trust

Purpose trusts are trusts which have a purpose. The purpose can be almost anything as long as it is lawful and moral. An enforcer is appointed to ensure that the trust does not deviate from the purpose.

Settlor Reserved Powers Trust

This is a trust in which the settlor is granted certain powers over the trust, such as the ability to change (add, remove) beneficiaries, trustees, enforcers, and even protectors.

Companies owned by a Reserved Powers Trust can have its directors removed by the settlor.

These trusts are popular because of the great degree of influence the settlor has. However, while all trust require great care when being set up so as to not compromise the trust, especially great care is required for Reserved Powers Trusts.

Noteworthy Service Providers

As always, this is not a recommendation.

(L) = Licensed service provider, as of publishing this post.

• Appleby (L)
• Bedell (L)
• Capco (L)
• Capita (L)
• Carey Olsen (L)
• Dominion (L)
• Elian (L)
• Hawksford (L)
• Jordans Trust (L)
• JTC (L)
• Nautilus Trust (L)
• Salamanca (L)
• STM (L)
• Trident Trust (L)
• Vistra (L)
• Volaw (L)

Banking

Banking in Jersey is effectively limited to private banking with deposits starting at 10,000 GBP (though more commonly 100,000 GBP). The exceptions to this are Lloyds and Standard Bank, which sometimes open personal accounts for non-residents.

Because of the island’s remote location, nearly all accounts are opened remotely or through an intermediary.

Banking Secrecy

Jersey used to have a somewhat strong banking secrecy but it did not put up a fight when OECD and the US during the late 1990s and early 2000s started cracking down on secretive banking.

Realizing what a devastating blow it would be for Jersey to be blacklisted, the authorities acted quickly to bring its banking laws and professional confidentiality laws in line with international standards while still maintaining enough of a veil of privacy to continue to attract cautious investors and wealthy trusts.

OECD has since concluded that “the Jersey competent authority has been in a position to answer EOI requests in a timely manner in most instances”, giving the island the rating of Largely Compliant.

Banks in Jersey

There are 33 licensed banks in Jersey, which includes a number of duplicates from banks holding more than one license.

Notable banks in Jersey include (home jurisdiction in brackets):

• Abu Dhabi Commercial Bank (UAE)
• Bank Leumi (Israel)
• Barclays (UK)
• EFG (Switzerland)
• HSBC (UK)
• Lloyds (UK)
• Nedbank (South Africa)
• RBS (UK)
• Santander Private Bank (Spain)
• Societe Generale (France)
• Standard Bank (South Africa)
• Standard Chartered (UK)
• UBP (Switzerland)
• UBS (Switzerland)

Living in Jersey

Quality of Life

There isn’t a lot going on in Jersey. If you like a quiet and peaceful life that is neither particularly warm nor particularly cold, Jersey is the place for you. There’s a reason tourists rarely stay for more than few days.

It can feel very isolated at times, although the airport has fairly good connections across Europe.

Taxation

Although there is no capital gains tax, wealth tax, or inheritance tax, there is a personal income tax of 20%. A special rate of 1% on income over 625,000 GBP is available to high-networth individuals who apply for it.

In reality, it is possible to legally reduce the tax burden by for example placing the funds in a foreign trust. This requires consent from the tax authorities and consent is usually only given to those with very high tax bills.

Sales tax stands at 5%. Jersey is attractive for shopping.

Immigration and Relocation

Jersey is trying to attract wealthy people to move to Jersey. Residency is available for those with a tax bill of at least 125,000 GBP per year. Holders of this type of residency can be permitted to purchase real estate on the island.

It is otherwise difficult to obtain residence in Jersey.

Final words

Through hard work, Jersey has earned a stellar reputation and it is recognized as one of the most important trust jurisdictions in the world today. This is backed by a fairly strong banking sector, albeit one that is perhaps too focused on private banking.

I am seeing a increased interest in Jersey for other reasons, especially incorporation. This will hopefully lead more banks in Jersey to consider commercial banking clients.

See also

• OECD Peer Review of Jersey (also has a list of TIEA and DTA)
• Financial Secrecy Index Jersey

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