In this post, I’ll look at an AI-generated article about setting up an international bank in Puerto Rico and explain where it is wrong. The bottom line is that most of the information on the internet is out of date. Bank licensing and regulation in the US territory of Puerto Rico is fast-moving and in flux. Here’s what you need to know to set up an international bank in Puerto Rico.
The following is from ChatGBT 4 which just added internet search capabilities. They did this to compete with Google’s Bard which was released a few days ago.
I gave the following prompt to ChatGBT 4 (paid version): tell me how to apply for an international bank license in Puerto Rico. What are the costs and how much capital is required?
I received the following response:
Starting a bank in Puerto Rico, also known as an International Financial Entity (IFE), involves several steps:
As for the capital requirements, you should have between $2.5m and $5m in Tier 1 capital available when you file for a new banking license in Puerto Rico. The final amount will depend on your business model and how much backup capital you can show to regulators. Besides, you should have enough cash to carry the bank through startup and at least 2 years of operations, and enough liquid cash from the investment group to support the Tier 2 capital requirements and cover the bank’s burn rate during an economic downturn. Each investor, shareholder, director, officer, and key person will need to provide 3 years of audited financial statements. The capital must be free and clear to the investor or investment group5678910111213141516.
Unfortunately, due to some technical issues, I was unable to find specific information about the costs or fees associated with obtaining a banking license in Puerto Rico. I would recommend reaching out to the relevant authorities in Puerto Rico or engaging a legal professional for the most accurate and up-to-date information regarding the costs.
I then asked ChatGBT to provide the links and citations (see numbers above also):
Here are the links to the articles I used for this information:
Note that I can post these links here because I wrote those articles back in the day. Thus, I can also tell you with certainty that they are out of date. If you would like to replicate this search, here’s how to turn on this feature within ChatGBT: https://www.tiktok.com/t/ZTRE81o2Y/
What’s interesting from a content creator’s perspective is that ChatGBT used my old website and old articles to generate the result. That site had domain name authority whereas my more recent site (the one you are on now) does not. Rather than looking for recent and detailed articles on the topic, ChatGBT looked at the search history, ranking, and authority, of the page just as Google search does.
Results from Google’s Bard were even worse. It used the text of Act 273 to come to the conclusion that the capital required is $550,000. This was accurate in 2012 and is what the law says, but anyone proposing this level of capitalization in 2023 would be laughed out of the regulator’s office.
– I will include Google Bard’s full text at the end of this article.
At the time of this writing, an applicant will need at least $5 million in paid-in capital, the ability to reach $10 million in the near future, and the owners will need to demonstrate the ability to support the bank in an economic downturn as I (and ChatGBT) stated above.
And I expect these numbers to double in the near future. For an article on international banks in Puerto Rico in 2024, see New International Banking Regulations for Puerto Rico in 2024.
I hope you’ve found this post to be helpful. The bottom line is that you can’t rely on the internet for information, even if it is written by me. You need to work with someone very experienced in the market who understands what today’s regular wants to see (also me).
For more information on setting up an international bank in Puerto Rico, please contact me at firstname.lastname@example.org
An Outdated Article by Google’s Bard
Prompt: Write an article about how to set up an international bank in Puerto Rico including the capital required.
– Note that Bard does not provide citations
How to Setup an International Bank in Puerto Rico
Puerto Rico is a popular destination for international banks due to its favorable tax laws and business climate. The process of setting up an international bank in Puerto Rico is relatively straightforward, but there are a few key requirements that must be met.
The minimum capital requirement for an international bank in Puerto Rico is $550,000. This capital must be held in a trust account with a Puerto Rican bank.
In addition to the capital requirement, there are a number of other requirements that must be met in order to set up an international bank in Puerto Rico. These requirements include:
The Application Process
The application process for an international banking license in Puerto Rico is initiated by filing an application with the Puerto Rico Commissioner of Financial Institutions. The application must include the following information:
The application process can take up to two years to complete.
Benefits of Setting Up an International Bank in Puerto Rico
There are a number of benefits to setting up an international bank in Puerto Rico. These benefits include:
Setting up an international bank in Puerto Rico can be a great way to expand your business into the US market. The process is relatively straightforward and there are a number of benefits to doing business in Puerto Rico.
If you are interested in setting up an international bank in Puerto Rico, I recommend that you consult with an attorney or financial advisor who can help you navigate the process and ensure that you meet all of the requirements.