Establishing A Financial Institution in The Bahamas

The Bahamas, one of the most mature offshore financial centres, owes its development to a number of enduring features. These features, while encouraging the general development of the nation of islands, have spurred the development of the financial services sector in particular. This sector, with over 40 years of steady growth and experience in the offshore banking and trust industry, is the second leading contributor to the economy of The Bahamas, employing more than 10% of the country's labour force and comprising 12% of GDP ($340 million).
 The financial centre of The Bahamas has consistently attracted well-established, internationally-recognised financial institutions and substantial investors. The centre, which manages assets of about $200 billion, offers the following benefits:
• A convenient location, just 50 miles from the mainland United States, coupled with an inviting climate.
•A commitment to zero taxation, offering freedom from taxes on income, capital gains, profits, gifts, inheritance and estates, as well as no withholding taxes on dividends, interest or royalties, and no payroll taxes.
•Strict enforcement of the complete confidentiality of banker-customer relations, through both common law and statue.
•A progressive, state of the art telecommunications system.
•A stable economic and political environment.
•Readily available professional services: legal, accounting, insurance, and management.
The Bahamas' Financial Centre offers a variety of services to the international community. These services are being strengthened continuously through the Government's partnership with the private sector. Represented by The Bahamas Investment Authority, incorporating the Financial Services Secretariat, the Government has reaffirmed its commitment to maintaining and improving The Bahamas' role as a sophisticated offshore finance centre, through the introduction of new and innovative legislation and the strengthening of existing legislation.
 The Bahamas is poised to offer opportunities to innovative, progressive investors. The financial services sector is a haven to such investors.
Up-to-Date Legislation
 The legislative framework governing the activities of the financial services industry is modern and accommodating. Representatives of the private sector are regularly consulted in a continuous effort to keep financial services legislation abreast of changing investor requirements.
Non-residents who do business in The Bahamas enjoy considerable freedom from exchange controls. The repatriation of foreign investment funds, foreign assets and dividends, and profits arising from foreign investment is allowed and facilitated.
Bahamian law strongly protects the right to confidentiality and privacy of bank clients and further protects the security and good name of investments in The Bahamas. Legislation criminalising money laundering in The Bahamas has strengthened the jurisdiction's reputation for being clean, reputable, and worthy of the full confidence of discerning international investors and business persons.
Recent changes in legislation include passage of the Mutual Funds Act, governing the establishment of mutual funds, and a new Trustee Act was recently introduced in Parliament. The International Business Companies (IBCs) Act 1989 provides the offshore financial sector with a corporate vehicle that is flexible and cost-effective. More than 36,000 IBC's have registered since 1990, many in the areas of mutual funds and portfolio management services.
Currently under development is a stock market that will allow closed-end mutual funds to register in The Bahamas. .

No Taxation
 With no personal or corporate income, capital gains, estate, gift, or inheritance taxes, the Bahamas offers an ideal tax environment.

A Strong Work Force
 One of the greatest assets of the Bahamian economy is its large, skilled workforce. The nation enjoys an adult literacy rate of 95%, and The Bahamas Institute of Bankers sponsors academic programs in conjunction with The College of The Bahamas that are designed to keep the nation's workforce competitive with any in the world.
 The professional community of accountants, international bankers, trustees, and investment specialists is large, diverse and highly skilled. There is also a full complement of respected and experienced law firms.
Types of Licenses Issued
 As stipulated by The Banks and Trust Companies Regulation Act, banks and trust companies are issued licenses to operate in The Bahamas under the following designations:
Agent
 An Authorized Agent is a bank or trust company authorized by The Exchange Control Department to deal in Bahamian and foreign currency securities and to receive securities into deposits (to act as custodians) in accordance with the terms of The Exchange Control Regulations Act 1956 and The Exchange Control Notices, issued from time to time by The Central Bank of The Bahamas.

Authorized Dealers & Authorized Agents
 Authorized Dealers & Authorized Agents provide the services of both Dealers and Agents.

Public Licensee
 A Public Licensee is a corporation permitted to carry on banking and/or trust business with members of the public. The company's Exchange Control designation determines whether the licensee is "resident" or "non-resident."

Resident
 A Resident bank or trust company is one that can deal only in Bahamian Dollars, but they can operate in foreign currencies with the authorization of Exchange Control. Trust Companies with resident status are allowed to deal in foreign currency securities on behalf of non-resident customers.

Non-Resident
 A Non-Resident bank and/or trust company is one which can operate only in foreign currencies, but may hold a Bahamian Dollar account, with Exchange Control approval, to pay local expenses.

Restricted
 A Restricted bank and/or trust company is one which is allowed to carry on business for specified persons, usually named in the license.

Non-Active
 A Non-Active company is one which is either in voluntary liquidation or wishes to keep the word "bank" or "trust" in the company's name, even though it is not carrying on any banking or trust company business. 

Nominee
 A Nominee company is one which holds securities and other assets in its name on behalf of clients of its parent bank or trust company.

Minimum Capital Requirements for Licenses
 Public Categories
Bank only: $1,000,000.00
 Bank & Trust: $1,000,000.00
 Trust only: $1,000,000.00
Restricted Categories
Bank only: $100,000.00
 Bank & Trust: $100,000.00
 Trust only: $100,000.00
 Nominee Trust: $10,000.00
Non-Active Categories
No minimum capital requirement is stipulated.

Application Procedure
The following information is required on the application for license:  •Name of the bank or trust company.
•Address of head or registered office.
•If head or registered office is outside The Bahamas:
a) address of principal office in The Bahamas;
 b) name of the officer who is to be the bank's or trust company's authorized agent in The Bahamas;
c) name of the other officer who, in the absence or inability to act of the officer named under (b) above, is to be the bank's or trust company's authorized agent in The Bahamas.
• Financial year of the bank or trust company.

 At some point, the principal(s) of the bank or trust company will be required to have a personal interview with the Central Bank.
Additional particulars to be supplied by applicants for licenses other than banks or trust companies specified in the Schedule of the Act:
•Name, address, and professional qualifications of auditor or auditors.
•Full name, with addresses, nationalities, and references, of all persons who are directors, partners, managers, or officers.
•Names, with addresses and nationalities, of all persons who are shareholders.
•Names of all subsidiary companies of the applicant, with addresses of their registered offices.
•Copy of the act, charter, certificate of incorporation or memorandum or association and articles of association or partnership agreement of the applicant, as may be appropriate, verified by a statutory declaration made by a director, secretary, or partner and duly authenticated as follows:
a) in the came of a company incorporated in The Bahamas, certified in accordance with the provisions of Section 16 of the Companies Act;
 b) in the case of a foreign company, certified and authenticated under public seal of the country, city or place under the laws of which such company has been incorporated;
c) in any case, authenticated in like manner to a deed or document when required to be registered under the provisions of the Registration of Records Act.
• References, including one from a bank or trust company.
•Status for the purposes of the Exchange Control Regulations Act and any regulations made thereunder and in force at the date of the application.
•True and complete yearly statement of the accounts certified by a director and the auditor that such statement is properly drawn up, so as to exhibit a true and correct view of the state of the applicant's affairs in respect of:
a) the accounts of the last financial year;
 b) the accounts of the penultimate financial year.
• Statement of assets and liabilities at the end of the month prior to the submission of the application certified by a director or senior officer.
•Statement of capital or any other income held, directly or through a subsidiary or a nominee, as an asset of the applicant.

License Fees for Financial Institutions
 The following annual fees apply to banks and trust companies:
 Authorized Agents & Authorized Dealers: $160,000.00
 Authorized Dealers: $100,000.00
 Authorized Agents: $ 60,000.00
 Other Public Institutions: $ 25,000.00
 Restricted Bank & Trust: $ 5,000.00
 Restricted Bank: $ 5,000.00
 Restricted Trust: $ 2,500.00
 Trust (Nominee): $ 2,500.00
 Non-Active Bank & Trust: $ 1,000.00
 Non-Active Bank: $ 1,000.00
 Non-Active Trust: $ 1,000.00
Applications should be sent to The Central Bank of The Bahamas, which can also provide additional details on the application process.

 The Central Bank of The Bahamas
 Banks Supervision Department
 Frederick Street
 P.O. Box N4868
 Nassau, N.P., The Bahamas
 Tel: (242) 322-2193-6
 (242) 322-2130-9
 (242) 322-2526-7
 Fax: (242) 322-4321

Pick of the euro accounts

Many small businesses are already trading in euros or have set up a euro account. We show you who's offering what:

HSBC
HSBC has a range of euro current account offerings for small business use. The Euro Account has no minimum balance requirement, a cheque book facility is available and an overdraft can be negotiated. The bank says the account is designed for those businesses which trade with continental European companies, or UK subsidiaries of continental European companies on a regular basis, and want immediate access to their cash and to be able to deposit funds easily.
Charges: Account maintenance is £2.50 a month. Each cheque issued costs 60p. There is a commission charge of 1% for foreign currency banknotes paid into or withdrawn from a Euro current account.
HSBC also has a current account offering for businesses that trade in other international currencies as well as euro. This has all the benefits of the euro account. Charges: Cheques issued in any major currency: £1.20, Cheques issued in other currencies: £12 and an account charge of £35 per half year. There is also a commission charge of 1% for foreign currency banknotes paid into or withdrawn from a Euro current account.
If you don't need your funds for a given period of time and want to earn interest on your balance HSBC's Fixed term deposit account has guaranteed and tiered rates of interest and money can be deposited at one, two, three, six or 12 months.
Charges: A partial or full withdrawal of funds before agreed maturity date will incur an administration fee (minimum £50 or currency equivalent). A commission charge of 1% for foreign currency banknotes paid into or withdrawn from a fixed term deposit account at start of term or on maturity. Fixed deposits in euro are subject to a minimum balance equivalent of $10,000.
The Call/short-term notice account is for those who use US dollars, euro or any other major currency extensively and want to earn interest combined with immediate access. There is no account maintenance charges if you keep a minimum balance of euro2,800.
Charges: Account maintenance is £35 each half year if cleared balance falls below the required minimum. A commission charge of 1% is applied for foreign currency banknotes paid into or withdrawn from the account
And the Multicurrency cheque book account is for businesses which make regular low value payments in a variety of currencies, but receive income in only one currency and prefer to pay by cheque. Charges: Each cheque issued costs £7. The minimum account management charge is £35 each half year and there is a commission charge of 1% for foreign currency banknotes paid into or withdrawn.
Lloyds TSB
Lloyds TSB has two euro business accounts. The Euro current account allows businesses and sole traders to make and receive payments in euros. A cheque book is available, no minimum balance is required and an overdraft can be arranged. There are no interest payments on balances in credit.
Charges: There is a half-yearly management fee of £12. Euro cheques paid from your account are 59p, cheques paid in are 27p plus a further charge of 70p for credit. Euro BACs paid out are 59p and paid in are 15p. Euro cheques paid into your sterling bank account are charged at £5 each
The Euro call account is also available to those with a euro current account at Lloyds TSB. No minimum deposit is required, but customers get tiered rates of interest on their balances in credit, which is calculated daily and paid out quarterly. There is no cheque book facility and you can only make transfers between this account and your euro current account.
Charges: There is no account management fee.
Barclays
Barclays has two euro accounts, a current account and a reserve account which can earn interest on any balances in credit. The two accounts will work in conjunction.
Euro account: no minimum balance restrictions and customers do not have to have a Barclays sterling account. A cheque book is available. Electronic credits, cheques and drafts will be accepted in any currency and converted as necessary - eurozone currencies are converted at a fixed rate (until January when they will be replaced by the euro) while other currencies are converted at the current floating exchange rate. Cheques paid in which are drawn on euro accounts in the UK will be cleared as domestic items, those drawn on overseas euro accounts will be collected or negotiated as foreign cheques. Overdrafts are available on the account at the bank's discretion. Charges: Standard credit entry: 75p, automated credit entry: 15p, standard debit entry: 54p, automated debit entry: 15p.
Barclays Euro Business Premium Account: This account earns interest on any credit balances denominated in euros -interest is paid quarterly. Interest rates are tiered. There is easy access (through the Euro current account) to funds with no penalty or loss of interest. The minimum balance is EUR 100 and there are no restrictions on deposits or withdrawals.
Charges: No charges on the account itself. All deposits and payments must be made through a Barclays Euro Account and normal transaction charges will apply on that.
NatWest
The bank offers a range of accounts for foreign currency dealings, including a currency extra account and a reserve account for savings. The euro current account has no minimum balance requirement and is available to all businesses with a turnover up to £1m.

Charges: There are no management charges and basic banking transactions are free. Cheque clearing costs £14 for transactions up to £10,000 and £26 over that amount. Foreign drafts cost £8 up to £100, £16 up to £5,000, £24 up to £10,000 and £40 over that amount. Customers can also use NatWest Relay which guarantees to get money to its destination in a week for just £10.

Cater Allen
Cater Allen allows sterling and currency balances to be held within the same account number. However, it is possible to open a euro account without having a sterling account at the bank. Also small business banking customers of Abbey National who require a euro bank account will be dealt with through Cater Allen.
Cater Allen can convert most major currencies on a same-day basis. Customers can make payments anywhere in the world using Cater Allen's network of corresponding banks and similarly payment's can be credited to customers' accounts by quoting a reference number. A minimum deposit of £5,000 is required to open an account and interest is paid on all balances over this amount.
Charges: There is no account management charge. To pay in cheques costs £15 and for transfers abroad it costs £25. A Gold Visa card is available in sterling,US dollar and euro denominations. There is no fee and no foreign exchange conversion charges levied on the card for either purchases or cash withdrawals.
Alliance & Leicester Business Banking
A&L offers a foreign currency account for small business customers with a turnover of up to £1m. The account means customers get access to the Eurogiro network which is present in 15 countries. The transactions take four to five days and customers pay a flat fee of £5. Payments can also be made by SWIFT, foreign currency drafts and bills of exchange.
Charges: There is no charge to open an account and there are no account management charges. Paying cheques out costs £12.50, a SWIFT/Telex payment costs £15.00. For payments into the account - a Eurogiro costs £5, a SWIFT/Telex costs £5, a cheque deposit costs £12.50.

eBank vs Brick-and-Mortar Bank or Traditional Banks

Here's Why Online Banks Are Better Than Traditional Banks

It's news we've heard before: online banks are the way of the future.
Online banks seem to have it all: relatively high interest rates, stellar customer service, low fees, and the added bonus of 24/7 access to your finances with the click of a button.
Still, online banking isn't for everyone, and the line between the two is becoming blurred as more banks ramp up their web presence to compete.

To help you decide, we tapped Richard Barrington, a senior financial analyst at MoneyRates.com, to break down the pros and cons of keeping your cash in a traditional versus online bank.
Security: This is one issue that scares many people away from taking their banking online, but Barrington said it shouldn't. Even traditional banks have all your financial information stored in a big data center that could be vulnerable to hackers. "Data theft is a very real risk these days, but, unfortunately, as a consumer, it doesn’t come down to whether you choose to bank online," he said.

If you choose an online bank backed by the FDIC, you'll be covered for losses up to $250,000 just like any other bank customer (use the FDIC's Bank Find tool to be sure). And, of course, remember to avoid doing any online banking on a public or shared WiFi connection, since that's when your information can be most easily intercepted.
Fees: Online banks are friendlier to smaller depositors because they typically require lower monthly balances. Barrington said traditional banks require an average of about $4,700 to be kept in your savings account without charging you a nominal monthly maintenance fee. For online banks, that number is much lower at $350. In addition, online banks are about twice as likely to offer free checking, he said.
"I think (online banking) is a really good option for younger customers — the fees as a whole are lower, the balance requirements are also lower, and young people as a rule are more comfortable with technology," Barrington said.
ATMs: Banking is all about getting cash when you need it, and Barrington said people should look at the locations of a bank's ATMs before they open an account. "You want to make sure you choose a bank where the geographic footprint of their ATM network is similar to your regular movements," Barrington said.
Traditional banks, like Chase and Bank of America, have ATMs all over in many major cities. Online banks, like Simple, often have agreements with ATM networks like Allpoint for surcharge-free withdrawals. And most others offer to reimburse customers up to a certain sum for using out-of-network ATMs.
Deposits: Web-based banks offer a few different options to deposit physical checks. You can always mail them in, but most online banks also offer "eDeposits" in which you can take a picture of the front and back of each check and upload it to your account for deposit. A lot of people still would rather deposit a check with a teller than a text message, but the option's out there. "People are for the most part checking their balances online, getting information online, but when it comes to depositing a check, they’d much rather hand it to a teller," Barrington said.
Interest rates: Online banks typically have better interest rates than traditional banks because they don't need to take any funds to operate brick-and-mortar buildings. In a recent MoneyRates.com study, online banks were found to have about six times higher interest rates than the nationwide average. Some of the best were found at Ally Bank, American Express Bank and Sallie Mae Bank.
Customer service: If you like to deal with the people managing your money via email or over the phone, go digital. If you'd rather have someone to talk things through with face-to-face, stick with a regular bank. Nearly all banks also have call centers and online message centers as well. Online banks are rarely, if ever, "closed." But if you'd rather use a traditional bank to complete your transactions or get questions answered in person, you'll need to visit your bank during normal business hours and make sure it's not a bank holiday.
Personal preference: Having a personal relationship with a banker can be a big benefit for people, especially those who like getting new products or services pitched to them or getting in-person financial advice. But keep in mind that banks have been closing physical branches left and right to cut costs, even installing ATMs that allow tellers to answer questions via web cam. "As time goes on, the comfort level will grow more and more," Barrington said. "If the technology can prove itself, people will use the technology."

The bottom line: If you're comfortable with technology and don't feel like you need face time with the people handling your cash, keeping your savings in an online bank is a great option. You'll see your money grow faster than with a big bank, and you'll pay less in fees. As far as checking accounts go, online and traditional banks are pretty much neck in neck.
 "I think the common denominator is that online banking is cheaper for banks to provide because they're not supporting a physical branch and people to staff that branch," Barrington said. "Even banks that offer both are likely to offer you higher rates and lower fees if choose online options."


Read more: http://www.businessinsider.com/online-bank-vs-traditional-banks-2013-5#ixzz3Ezg0t7yxWhat to Look For
• Security Be sure that deposits in any bank you choose are FDIC insured. This means the Federal government promises that if your bank crashes you will not lose the money in your accounts, up to $250,000 (provided they are checking or savings accounts, not an investment account).
• Cost of banking Consider fees, interest rates and minimum-deposit requirements.Thanks to the internet, everyone has access to competitive banks that don’t charge fees. If you are already committed to a bank that does charge fees, call and ask that they be waived. Fees that can be avoided include ATM fees, costs of new checks, stop-payment fees, currency-exchange fees, minimum-deposit fees and annual fees. If that doesn't work, be aware that banks often waive fees for customers who also have credit cards, mortgages or CDs at that bank, in addition to a checking account. If you have a mortgage, see if it pays to bank with the lender who holds it.
• Interest rates Some banks pay interest not only on savings accounts, but also on the money in your checking account.
• Resources beyond basic banking Will you need insurance, a credit card, a loan or a mortgage? Banks vary in the services they offer; choose one that meets your variety of needs.
• Convenience  Both ebanks and brick-and-mortar banks have embraced technology to allow customers easier access to banking services. Most banks provide  apps that allow on-the-go banking, but some may be better suited to your needs (or your smart phone) than others. Both ebank Charles Schwab and brick-and-mortar bank Wells Fargo let you use your mobile phone for depositing checks with a smart-phone camera, monitoring accounts, transferring money and paying bills. Charles Schwab’s app allows you to monitor and manage your investments, while Wells Fargo lets you transfer money to other Wells Fargo account holders with just an email or phone number.
Brick-and-Mortar Benefits
• Human contact: Person-to-person customer service may help you express concerns and talk through big financial decisions better than calling or messaging an online representative.
• ATMs Big banks seem to have an ATM on every other corner of most cities.
• Services provided: brick-and-mortar banks may offer a larger suite of services – such as credit cards, loans and mortgages – that an ebank might not offer. Being a long-term bank customer may be an advantage when you are looking for a loan. And if you prefer/need to deposit paper checks with a teller, you have a place to do it.
• Additional services: brick-and-mortar banks can help with services such as notarizing forms, currency exchange, quarters for the laundry machine or crisp new bills for holiday tips. Banks will often only provide these services for account holders, so having an account at a brick-and-mortar bank can come in handy.
eBank Benefits
• Convenience  Online banks provide 24-hour access to your accounts and to customer service.
• Easy monitoring Having access to all of your banking online means that you can view your financial status within minutes, from the comfort of your home. eBanks also make it easy to get to your banking history and past statement – no digging through your file cabinet to make sure you deposited a check three months ago.
• Fast turnaround You can deposit checks, pay bills, transfer money or have your bank write checks for you, all with a few easy clicks.
• Lower overhead Because ebanks don’t have to pay for as much physical space – they do have offices, but not multiple branches for consumers – they often have lower fees than traditional brick-and-mortar banks.