GENERAL
The granting of a Bank Licence is discretionary. It is not a right of any applicant. The key point of control in the regulation of the banking sector is when an application is being considered by the licensing authority. Applicants should be aware that the proper investigation on their application may take some time and they should plan accordingly.
2 LICENSING POLICY
The policy with respect to bank licensing is as follows:-
2.1. A NATIONAL BANKING LICENCE only allows banking activities to be conducted within the Islands as defined in S. 3-(2) (a) of the Banking Ordinance 1979. Applications will be considered from:
(A) Banks which are predominantly locally-owned
(B) Branches or subsidiaries of banks with a well established and proven track record and which are subject to effective consolidated supervision by their home supervisory authority.
2.2. AN OVERSEAS BANKING LICENCE only allows banking activities to be conducted offshore, as defined in S.3-(2) (b) of the Banking ordinance 1979. Applications will be considered from:
(A) Branches or subsidiaries of banks with a well established and proven track record which are subject to effective consolidated supervision;
(B) Banks which, although not subsidiaries, are closely associated with an overseas bank, and which, by agreement, will be included within the consolidated supervision exercised by the overseas bank's home supervisory authority
(C) Wholly-owned subsidiaries of non-bank corporations whose shares are quoted on a recognised stock exchange, where the objective of the subsidiary is to undertake in-house treasury operations only, and where the operations are fully consolidated within the published financial statement of the parent company.
2.3. A Joint National and overseas Banking Licence may be applied for by any of applicants detailed in 2.1 and 2.2(A) above.
2.4. Banks will only be granted licences if their place of incorporation, mind and management are within the same jurisdiction, or, in the case of a subsidiary, if the mind and management are located in the jurisdiction in which consolidated supervision is being exercised.
2.5. In line with internationally accepted good practice in relation to bank licence applications, the Licensing Authority should expect as a minimum to be satisfied that:
(A) The management has proven experience in a relevant field of banking
(B) The controllers are fit and proper people to undertake the functions envisaged and that the ongoing management will be competent;
(C) The institution will conduct its business in a prudent fashion;
(D) The institution has devised an appropriate and sustainable business plan;
(E) Adequate capital and other resources will be provided in relation to that business plan;
(F) Direct confirmation has been received from the supervisory authority in the country in which the institution or its proposed parent is incorporated, that the authority;
(i) consents to the establishment of the institution in the Turks & Caicos Islands
(ii) will exercise consolidated supervision over the institution's overall activities, including within the Turks & Caicos Islands, as appropriate.
(iii) will cooperate in the sharing of regulatory information with the Licensing Authority.
2.6. The applicant will appoint approved auditors who will perform that work according to internationally accepted auditing standards.
2.7. The applicant will disclose to the Licensing Authority all information that the latter legitimately needs to fulfil its overall supervisory responsibilities.
2.8. A prerequisite for the maintenance of sound banking standards is careful consideration of the financial standing, overall probity, skills and reputation of new banking applicants. To this end in addition to obtaining the formal consent referred to in paragraph 2.5 (F), the Licensing Authority will consult parent supervisory authorities about these aspects in relation to each new applicant seeking to establish a bank in the territory. This consultation is an essential part of the duty to exercise careful and proper due diligence.
2.9. Any subsequent change of ownership once the licence has been granted, will require the prior approval of the Licensing Authority and will be subject to independent verification and checking by the Authority, similar in scope to that required of the original applicant.
3. APPLICATION
An application for a Banking Licence will require submission in the first instance to the Financial Services Commission of the following:
3.1. Basic information, including proposed memorandum and articles of association, on the prospective banking institution on the basis of it being established.
3.2. Documentation on institutional and individual shareholders of the proposed institution.
3.3. Details of Group structure
3.4. Audited annual financial statements of institutional shareholders for previous three years
3.5. Business plan which will cover in detail the following outline components:
1. Business objectives and rationale for proposed operation
2. Management structure and operations
3. Source and type of business development, client base and funding
4. Financial projections over three years
5. Operating policies, including capital adequacy risk exposure and control
6. Internal and administrative controls
7. Benefits that the proposed institution will bring to Turks & Caicos Islands and the reason for choosing the Islands as a place to establish a banking business
4. LICENCE FEES
4.1. Fees applicable oil submission of an application are:
(A) Upon the grant of a National banking licence - $15,000
(B) Upon the grant of an Overseas banking Licence - $10,000
(C) Upon the grant of a joint banking licence - $20,000
4.2. Provided that, in the case of any grant, such fee shall be reduced by one-twelfth for every completed month from 31st day of March last preceding the date of grant.
4.3. The Government of the Turks & Caicos Islands reserve the right to retain a sum which shall represent ten percent of the full application fee, in the case of any application not being granted.
Fees applicable on annual renewal of a licence are:
4.4. On or before 31st March in each year after the grant of a National Banking Licence - $10,000
4.5. On or before 31st March in each year after the grant of an overseas Banking Licence - $ 7,500
4.6. On or before 31st March in each year after the grant of both a National and overseas Banking Licence - $ 17,000
5. BENEFITS
5.1. Turks & Caicos Islands (TCI) is a British Dependent Territory providing a solid base in which to set up a banking activity.
5.2. Banks are regulated by the Financial Services Commission which has the responsibility for supervising all financial services in TCI.
5.3. TCI has a well-developed legal structure and growing professional infrastructure.
5.4. TCI uses the US dollar as local currency making banking and currency transactions easy to handle.
5.5. TCI has excellent air and telecommunications with North America and the rest of the world.
5.6. The TCI Government has a policy of to encouraging and developing inward investment into the country.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
