Banking license: offshore and neobanks

Banking startups and the system as a whole are rapidly evolving to provide customers with 24/7 transaction capability and the easiest possible access to financial products. These new generation banks or neobanks have revolutionized the sector and are of increasing interest to the younger generation and executives who are constantly on the move and interested in global service. 

Neobanks operate only through mobile apps or websites and do not depend on offline offices or a large number of people on staff. For the new age entrepreneur looking to enter the banking business, a flexible banking license would be an ideal asset, which gives the opportunity to register a neobank and also gives access to a wide range of services, including cryptocurrency transactions, online banking, and mobile banking. 

SBSB specialists offer the most reliable and comfortable jurisdictions for obtaining banking licenses. We also have current offers for the purchase and sale of ready-made offshore or European banks.

A complete complex of banking licensing in the whole world. Services available for European regions: Germany, Spain, Italy, Czech Republic, Poland, and Portugal

The choice of the banking license type obviously depends on preferences and objectives. Tech giants, fintech startups, and neobanks are significantly impacting the world of payments and investments, and traditional banks are projected to lose 30 to 50% of their investments. The losses are related to robotization, new scoring models, and high physical office and operational costs. 

On the other hand, a more mature and solvent audience still doesn’t feel enough trust in neobanks and online banks. So the choice depends on your target audience and the challenges you face. 

How does a neobank license in Europe differ from an offshore banking license 

Most neobanks have a payment license, which does not allow an institution to be called a “neobank”. Only those institutions with a credit institution license can be called that. Most banks rely on Temenos or Arkea infrastructure.

Today, the number of neobanks entering the market each year is 5 times what it was in 2016. This revolution is mostly concentrated in Europe and Asia.

The players you may have heard of are in the UK (Starling Bank), France (Qonto), Finland (Holvi), Germany (N26), and other European countries.

In Europe, neobanks use the European Payment Services Directive PSD1, which allows new institutions to enter the financial services market with less stringent approvals. Therefore, in France it is easier to obtain a license thanks to the national competent authorities of NCAs such as ACPR, in the UK — FCA, in Germany — BaFin.

Features and advantages of an offshore banking license

The main advantages of obtaining an offshore bank license are unlimited financial freedom and security, as well as the ability to increase income through offshore companies. Offshore banks are also attractive because they either pay no taxes at all or at a much lower rate than resident banks.

Offshore bank licenses come in several categories, but it is important to remember that the types of activities of an offshore bank may be partially limited compared to those of resident banks.

We’ve compiled 9 key benefits of an offshore bank license:

• operating activities are not subject to exchange control;
• avoidance of excessive regulation by the Central Banks;
• fairly low start-up capital to set up a bank;
• opportunity to provide an unlimited list of financial banking services to the population;
• optimization of taxation;
• tax planning of both banking structures and companies;
• strict confidentiality of banking operations performed;
• security of keeping funds in one’s own bank and settlements through one’s own bank;
• owning a bank is a highly profitable business.

Let’s take a brief look at several offshore jurisdictions for obtaining banking licenses and providing the opportunity to get a digital bank license. 

Pros and cons of obtaining an offshore banking license and a neo-banking license in the Cayman Islands

Advantages	Disadvantages
The bank is exempt from taxes and fees on income, capital gains and interest earned from offshore banking.	Significant amounts of state fees for registration of a license (from 100,000 up to 600,000 USD).
The Cayman Islands have been recognized as a jurisdiction capable of conducting banking transactions with the highest degree of reliability.	Annual state “license renewal” fee, as well as an annual fee.
Recently, the jurisdiction has also gained notoriety as a leading banking center.
More than 5,000 banking licenses have been issued in Cayman.
There are no currency controls.

Pros and cons of obtaining an offshore banking license and an online banking license in St. Vincent and the Grenadines

Advantages	Disadvantages
No income tax, no capital gains tax.	Relatively strict bank currency regulations.
Absence of stamp duties, currency control.	The tightening of bank regulation after 2000 led to a sharp decline in the registration of offshore banks.
The cost of setting up a bank is lower compared to the Cayman Islands.	All banks are required to have a local audit every 12 to 18 months.

How to Get a Digital Bank License and Offshore Banking License in Dominica [Pros and Cons]

Advantages	Disadvantages
The license allows you to serve both non-residents and residents of Dominica.	Obligatory confirmation of the origin of shareholder funds.
Only income from transactions with residents will be taxed.	Mandatory shareholder verification procedure. All bank employees through private investigative agencies regarding their reputation, criminal record, publicity, etc.
Registration of offshore banks in Dominica is subject to the Offshore Banking Act, 1996 and the Offshore Banking (Amendment) Act, 1997, which allows for the registration of a bank in just 1–2 months.	The cost of checking one person is approximately 10,000 USD.
The required amount for the authorized capital of a bank in Dominica is a relatively lenient requirement for registration.

Should you get an offshore banking license and a neo-banking license in The Gambia?

Advantages	Disadvantages
Easy jurisdiction and the ability to register a bank in the shortest possible time.	—
It is neither blacklisted nor graylisted by the OECD Financial Action Task Force.	—
It is neither blacklisted nor graylisted by the FATF Financial Action Task Force and is a member of GIABA (the intergovernmental group against money laundering in West Africa).	—
No significant restrictions, in case you want to accept customers from the U.S., the bank can be established in the form of a bank compatible with the requirements of FACTA.	—

How to get an offshore banking license and a neobank license in Panama

Advantages	Disadvantages
The fastest way to obtain membership in SWIFT (Society for Worldwide Interbank Financial Telecommunication) compared to other jurisdictions.	Quite a complicated procedure for obtaining a license.
The bank is exempt from taxes and fees on income, capital gains and interest earned from offshore banking.	Local control and monitoring of bank activities is present in Bahamas, Belize, Marshall Islands.
Panamanian banks enforce strict bank secrecy laws.	The Bahamas, Belize and the Marshall Islands have relatively strict controls and banking regulations. Like the processes of applying for a license, pre-screening data and further operations are not easy.

How to get an offshore banking license and an online banking license in the Cook Islands

Advantages	Disadvantages
The Cook Islands are enticing because of the simplicity of the procedure and the time it takes to review the documents to obtain a license. On average, it takes six weeks.	The Cook Islands are sometimes referred to by the media as an offshore zone that is often used for fraudulent purposes.
The bank is exempt from taxes and fees on income, capital gains, and interest earned from offshore banking.
No currency control.

Other jurisdictions for obtaining an offshore banking or digital banking license

In addition to the jurisdictions listed above, variations for obtaining a banking license can be Gernsey (an island within the Channel Islands), Jersey Island, Isle of Man, and others.

We issue banking licenses for countries such as Spain, Italy, Poland, Portugal, Czech Republic, Germany, and others. 

The choice of jurisdiction and type of license is an individual process and in order to find the ideal option in terms of requirements, opportunities, and the tasks you need to solve, we suggest you book a consultation with the SBSB team.