In this post, I’ll consider the best offshore banking license for 2020. If you’re planning to start an offshore bank that will focus on crypto, wealth management, or operate as a transactional bank, this is the place to start. Here’s what you need to know about the best offshore banking license for 2020.
First, let me define what I mean by an offshore banking license. An offshore banking license sometimes referred to as a Class B bank or a second-floor bank, is a license that allows you to offer all types of banking services to people outside of your country of operation. That is, you can provide financial services to international or foreign companies and individuals.
For example, an offshore bank licensed in the Cayman Islands could accept clients from any country other than the Cayman Islands. An international bank in Cayman can open accounts for any company or person outside of Cayman.
When considering the best offshore banking license for 2020, keep in mind that the industry has been shrinking or contracting for the last decade. For example, the Cayman Islands has gone from about 250 offshore banks to 133 banks in the last 5 years. Likewise, Luxembourg has gone from about 220 international banks in the 1990s to 135 banks at the end of 2018. Countries like Belize have not issued any new licenses in many years and most other jurisdictions have seen a net loss or have been flat.
● For more on Cayman, see The Decline of the Cayman Islands Offshore Banking Empire
Over the last few years, we’ve seen new licenses issued in Luxembourg, the first signs of growth in that region. Even with these new applications, there was a net loss of banking licenses in Luxembourg, from a recent high of 141 in 2014 to 135 by the end of 2018. Most of this activity in bank license applications have been from for FinTech banks.
The only exception where we see growth in the offshore banking sector is in the US territory of Puerto Rico. This is the ONLY jurisdiction where the demand for offshore banking licenses is outstripping availability and the ONLY jurisdiction where we see growth.
There are currently 81 offshore banks licensed in Puerto Rico, with over 40 new applications pending. Of the operating banks, about 50 were licensed in the last 3 years. Demand to purchase international banking licenses and operating banks are also intense in Puerto Rico.
With all of this said, here are the Best Offshore Bank Licenses for 2020
1. Puerto Rico
3. St. Lucia
8. Hong Kong
9. Cook Islands
11. The United States