Creating an Offshore Bank

Local and exempted banks

The International Banking Act of 2002

The new International Banking Act No.4 of 2002 allows companies to set up and operate offshore banks in Vanuatu. The law is consistent with current international requirements and provides an improved regulatory framework for offshore banks in Vanuatu.

The new banking law makes Vanuatu more attractive to corporate business and financial institutions that require a well-regulated banking environment but it also provides for a complex and exact set of requirements that must be complied with to verify that the applicant is trustworthy and will not engage in illicit activities.

Some of the key features of the International Banking Act include:

• The Offshore Bank will be supervised by the Reserve Bank of Vanuatu.
• Appointment of Directors and Managers is subject to review by the Reserve Bank.
• Minimum capital requirements are suited to the proposed banking activity.
• The Offshore Bank must maintain a physical presence in Vanuatu.
• Existing Exempt Banks must re-apply for a license prior to 1 August 2003.
• Licensees are subject to restrictions of large exposures and aggregate investments in shares issued by other companies.
• Audits by external, qualified auditors are required.

Guidelines

The Reserve Bank is in the process of setting up Prudential Guidelines for the operation of International Banking institutions that will set required standards for:

• Credit Risk Management
• Loan Classification
• Liquidity Management
• Capital Adequacy
• Audit Arrangements
• Restrictions on shareholdings
• Dealings with Subsidiaries and Associates
• Large exposures in excess of 25% of capital
• Customer Due Diligence
• Fit & Proper Requirements for Management

Under the new Act International Banks must file quarterly returns. The forms for these are now under review and will be published early in 2003.

To download the required application forms and relevant information click here.

Please contact Moores Rowland for comprehensive, professional advise and to keep abreast of the latest developments.

http://www.mooresrowland.com