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Offshore Bank Licenses

The bank sector and banks were always perceived by the public, as well as by the business world, as a symbol of wealth and economic power. The same applies also in the case of offshore banks, which can be advantageously formed in a number of leading as well as new offshore jurisdictions and financial centres. In most jurisdictions it is almost impossible for a new applicant, who wants to run banking services, to establish a bank company, unless the applicant is a renowned and respected international bank incorporation. A number of countries require the registered capital of a bank to amount to hundreds of millions of dollars, which must often be fully paid up still before the issuing of the license or they concentrate their attention only to those entities who already have a bank license in another country. But still many entities, especially international holdings, are interested in getting a bank license for the providing of bank services for the needs of their holding. The bank license which is referred to as "internal" in many jurisdictions can be obtained in a standard manner in many offshore locations at surprisingly advantageous prices and under favourable conditions. Full or partially limited general or international bank license is more demanding in terms of requirements imposed on the registered capital amount, nevertheless there are locations where it is possible to get even this type of license under acceptable conditions.

In general terms it is possible to divide offshore bank licenses into two basic types of licenses which can have a number of further subtypes. General bank license is understood in a majority of jurisdictions as a license for the providing of bank services at the place of registration or international bank services for the public. The bank acts as any other bank entity, it can accept deposits from the public and perform common bank services with residents or non-residents. In an overwhelming majority of countries, however, the activity is limited to providing services to non-residents, i.e. offshore banking services only. This type of offshore bank is established in view of providing commercial bank services in an offshore regime. Restrictive bank license (often referred to as the "internal" license) is a license which limits territorial activities of the bank, possibility of providing services in foreign currencies or to certain persons. In a majority of cases, the bank cannot accept deposits from the public and it can provide its services only to those entities which are provided for in the bank license. This bank is used as the so-called corporate bank for active Cash Flow management.

Most offshore banks are not subject to taxation, withholding taxes, stamp duties, fees and taxes for cheques issued or accepted or to other forms of direct and indirect taxes. This brings an entirely new concept of banking services for the client, which has been known for several years as OFFSHORE BANKING or INTERNATIONAL PRIVATE BANKING. Another significant factor of the offshore banking services is formed by strict anonymity and confidentiality, which is welcomed by many investors and depositors having a bank account opened in the name of a natural person or legal entity, which is often an offshore company as well.

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