St. Lucia is one of the most highly sought after jurisdictions in relation to the application for Bank Licenses for both private banks offering services to select few clients and larger banking entities offering banking services to the general public. But the reason this jurisdiction is so popular has nothing to do with the ease with which a Bank License can be obtained. To the contrary, in fact it has more to do with how difficult it is to obtain a license to provide international Banking Services.
In order to provide international banking services from the jurisdiction of Saint Lucia, a company whether existing, or newly incorporated, must first apply for either a Class A Bank License or a Class B bank License. Both licenses are granted under the International Banks Act of Saint Lucia and international Banks are regulated by this piece of Legislation. You can find a full script of the legislation by clicking here http://www.saintluciaifc.com/pdf/legislation/bank_act.pdf. The International Banks Act came into force in April 2000.
So why is it difficult to obtain a Class A or Class B bank license in Saint Lucia and why is this a good thing? There are is one answer to both of those questions. By rigorously scrutinizing applications for bank licenses, and adopting in all cases, a procedure of enhanced due diligence, St. Lucia has been able to accept a select few companies wishing to conduct international Banking services, and who offer low risk services that are easily regulated and monitored by the Financial Services Regulatory Authority of Saint Lucia. Now that isn’t to say the Saint Lucia regular is not up for a challenge and will not consider License applications that involve companies wishing to provide complex financial products, it simply means the regulatory ecosystem in Saint Lucia is centred on a low risk environment as its default position. As a result, many of the new banks entering into the jurisdiction tend to thrive despite the fact that it is, or has become exceedingly difficult to successfully set up an offshore bank. Difficulty, as we all know, arises where USD currency intermediary bank clearing services are required, together with the challenges presented by today’s continuously constricting regulatory landscape.
All of these challenges aside, if you are a company with an already established banking infrastructure, such as intermediary banking services, SWIFT network access, a banking intranet and client software platform, and the necessary human resources to fill your top managerial positions within the company, then you may be in a position to successfully apply for a Saint Lucia bank license. However, the success of your application will depend firstly on whether the primary investors of your bank clear the enhanced due diligence protocols relating to their source of wealth and political exposure if any, and whether the proposed underlying business of your new banking entity falls within the acceptable risk thresholds established by the Saint Lucia Regulator (FSRA).
In all cases, mortgage brokerage services, precious metals trading and escrow account services would be considered high risk services by the FSRA. However, this does not mean a license application with fail because these products are being offered. It does means however, that considerable resources will have to be deployed within the bank’s own internal regulatory functions as well as the FSRA’s own available resources, to ensure that these services are being monitored effectively. Our advise to our clients who are applying for a bank License is always the same. Simply put, if the project is strong, and the UBOs satisfy all enhanced due diligence requirements, the application is more than likely to succeed.
This means that the underlying business of the bank must be clearly laid out to show specifically every aspect of the bank’s business, from its uniqueness in the market as a new entrant, to the variety of products being offered and the competitiveness of the prices for which these products are to be sold. We encourage our clients to think of their application as a ‘project’ from start to finish, whose strength is determined by how marketable this project would be if it were being sold to an interested investor. If an investor would not be interested then why would the FSRA? The applicant must demonstrate with utmost clarity, the level profitability of the underlying banking business, and above all the FSRA must understand why this particular project would succeed within the jurisdiction.
We at Fortgate understand these important nuances in applying for a bank license. If you would like to build a bank in St. Lucia talk to us and we will show you how to achieve this.
You can view our comprehensive guide to applying for and obtaining an International Banks License here: Fortgate Guidance on Establishment of a Class A or Class B Offshore Bank Further guidance on what information is required in order to apply for either a Class A or a Class B license can be found here: Guidance Notes Bank License