McKnights acts on behalf of various banks and other financial institutions located locally within the Turks and Cacisn Islands and onshore. Our lawyers have extensive experience in most aspects of international and local banking. Whether you are a borrower or lender, McKnights can advise on all matters of Turks and Caicos law that may affect your particular transaction.
McKnights routinely advises the major banks in the Turks and Caicos and their customers on letters of credit, custody agreements, loan agreements, documentary credits and security documentation and provides legal opinions.
The categories of Bank licenses available under the Law are as follows:
“A Licence” – Unrestricted Bank Licence
This type of licence allows its holder to provide service to domestic and international markets. It will usually be granted only to a branch or subsidiary of a major international bank which has a net worth of no less than US$50 million.
“B Licence” – Unrestricted Offshore Bank Licence
Although this licence is restricted to servicing non-residents of the Cayman Islands this type of licence permits the holder thereof to carry on unrestricted banking business anywhere in the world from the Cayman Islands except, in general, service in the Cayman Islands.
“B Licence” – Restricted Offshore Bank Licence
This licence is restricted to named clients of the holder of the licensee, who are located offshore. This type of licence would be granted where the licence holder has a supervised banking entity in another country or, the licensee is a well established overseas corporate group establishing a bank in the Cayman Islands to perform a treasury function for the individual corporate members of that group only and there is no intention of taking third party deposits.
It is a requirement of a holder of a B licence which is not a subsidiary or branch of a bank licenced in a country or territory outside the Islands that it have such resources (including staff and facilities) and such books and records as the CIMA considers appropriate having regard to the nature and scale of the business. Generally the Authority will require a minimum of two persons located in the Islands having suitable experience, one of whom would be the Managing Director and the other the Assistant Managing Director.
This will be issued in the same categories as the “B” bank licences and permits the carrying on of trust business anywhere in the world from the Cayman Islands or in the Cayman Islands depending on the category of licence issued.
Capital Requirements and Government fees
The minimum capital requirements depend on the type of licence to be issued, however please note that the actual paid-in capital for the licensee will also be determined by the projected balance sheet based on the capital adequacy methodology developed by the Basle Committee on Banking Supervision (which in general shall not be less than ten percent).
The capital, upon approval by CIMA (the statutory board which regulates the banks and administers the Bank and Trust Law) may be invested with the parent bank or trust company in some cases.
Company vehicle for establishing Cayman Islands Bank
One may either register an existing foreign bank, as a branch of a foreign bank having a place of business in the Cayman Islands, or a Cayman Islands company may be incorporated for the purposes of conducting banking business.
Either an Ordinary Company or an Exempt Company may be used for a category B Bank licence and an Ordinary Company may be used for category A Bank licence, as an Exempt Company cannot carry on business locally. The advantages of using an Exempt Company for a category B Bank licence includes, the company receives a guarantee from the Government, for a period of twenty years as of the date of incorporation the company will not be required to pay taxes, it may issue shares of no par value and it need not have “Limited” or “Ltd.” in its name.
Supporting Documentation for Licence applications
The company licence holder must have no less than two directors and the company must appoint at least 2 individuals resident or a body corporate registered in the Cayman Islands to be its agent. All Officers, Agents, Directors and Shareholders of any licensed Cayman bank must first be approved by CIMA. There are personal questionnaire forms that are required to be completed by the Directors and Shareholders, Controllers and major corporate officers, together with supporting documentation, to be submitted to CIMA for all such persons.
McKnights will assist in compiling all of the requisite documentation required to support the licence application, as required by Law and as set out in CIMA policy, inclusive by not limited to, the above referenced questionnaire form, supporting documents required from the parent company and its supervisory authority, detailed business plan, management structure and letters of undertaking etc.
McKnights will also assist the applicant in liaising with all other necessary local service providers required under Law in furtherance of the licence application, such as local auditors.