It is possible for a foreign national/ company to establish a bank in St Lucia in the Caribbean. Before you can do so, however, you need to obtain a banking license in the country. St Lucia stands out among other Caribbean jurisdictions as one of the most attractive places for starting an offshore bank. Below we discuss the process of acquiring a banking license in the country. We also offer some practical recommendations to those individuals who are interested in opening a bank in St Lucia.
What is a banking license?
A banking license is an official permit issued by the financial and regulatory authorities of a national state. It authorizes the holder to provide banking services to clients. In particular, the license holder can perform the following operations:
- Open bank accounts and take deposits from clients;
- Give out bank loans to individual and corporate clients;
- Process payments including both domestic and international payments;
- Issue and service plastic bank cards including debit and credit cards;
- Exchange currencies and work in the foreign exchange market including FOREX.
As you can see, the list of banking services is rather large and those organizations that hold banking licenses are able to provide complex banking solutions. A banking license also authorizes its holder to enter international financial markets thus extending the geography of its business operations. A licensed bank can perform global transactions and participate in international credit operations.
A banking license in St Lucia
St Lucia is an independent country in the eastern part of the Caribbean Sea and it is a member of the British Commonwealth of Nations. The jurisdiction has an advanced legal system and a well-developed financial sector, which makes it attractive for global financiers. Trust and security are ensured in St Lucia by efficient financial regulators.
Many experts put St Lucia among the best jurisdictions for launching a banking business. Acquiring a banking license in St Lucia is a truly attractive opportunity. The banking sector started to actively develop in the country in the early 2000s and the first banking license was issued in 2001. St Lucian banks specialize in providing services to clients from many different countries. The banking sector is truly international and multilingual in the country.
The International Banks Act regulates the activities of the banks licensed in St Lucia. It puts forward strict requirements concerning banks’ capitalization, risk management, and corporate management instruments. This fact increases the level of trust to St Lucian banks on the part of their customers. In addition, the Act sets high standards for transparency of banking operations and financial reporting. All banks in the country observe the international regulations in the banking sector.
The International Banks Act is supported by the Financial Services Act of 2011 and AML/CTF legislation passed in 2010. The Acts set the criteria and the obligations for the banks that guarantee honesty, stability, and legality in the country’s banking sector. All banks are closely monitored by the authorities of St Lucia.
We would like to make a special note at this point. If you are looking for a place where your bank transactions can be confidential, you have to realize that St Lucia follows all the AML/CTF recommendations and it applies Common Reporting Standards. Banks licensed in St Lucia play by the rules. They apply AML instruments and conduct KYC procedures. This holds for both individual and corporate clients.
Advantages for banks licensed in St Lucia
If you obtain a banking license in St Lucia, you will be able to enjoy the following main advantages:
- Low tax rates and tax incentives. Banks in St Lucia can be taxed at discounted rates and make use of various tax incentives. Under certain conditions, banks can be tax-exempt in the country.
- Access to international markets. The license authorizes a St Lucian bank to work internationally and expand their operations to other parts of the world.
- Flexible regulations. The Government of St Lucia exercises a balanced approach to regulating the activities of local banks.
- Good reputation. St Lucian banks enjoy a very good reputation in the global banking circles.
- Transparent license acquisition procedure. Obtaining a banking license in St Lucia is relatively easy.
- Foreign exchange flexibility. There are very few restrictions in St Lucia on operations with foreign currencies. This makes international money transactions non-problematic.
- Diversity of banking services. Your bank based in St Lucia will be able to offer a wide range of banking services.
Two types of banking licenses in St Lucia
St Lucia issues banking licenses of ‘Class A’ and ‘Class B’. Each license has its own characteristics and the requirements that the applicants have to meet are different too.
Class A banking license in St Lucia
A banking license of Class A authorizes the holder to provide the full spectrum of banking services. If a bank holds a Class A license, it can offer services to all types of clients (individual and corporate ones), take clients from different countries onboard, and perform international financial operations. If a bank is to qualify for a Class A license, its capital stock has to be at least 2.2 million US dollars. In addition, a security deposit of at least US$ 300,000 needs to be made.
The main advantages of holding a banking license of Class A in St Lucia include the following ones:
- An opportunity to offer a wide range of banking services to customers;
- An opportunity to offer services to small, medium-size, large, and giant corporate clients;
- An opportunity to win the clients’ trust as a full-fledged bank not restricted in its activities;
- An opportunity to scale the business globally and choose the clients freely.
Class B banking license in St Lucia
A banking license of Class B will suit a financial institution that intends to provide services to a single corporate client or a small group of corporate clients. The number of clients is limited to ten in this case and they have to be connected with each other in some way. To qualify for a Class B license, the bank has to have US$ 700,000 in capital stock and a US$ 300,000 security deposit is also required.
The main advantages of holding a banking license of Class B in St Lucia include the following ones:
- Comparatively modest requirements to the capital stock;
- An opportunity to provide focused banking services;
- An opportunity to provide specialized banking services
- Easier management and control procedures due to the smaller size.
Whatever type of banking license you apply in St Lucia for, you will be able to succeed in the endeavor in all likelihood. Your chances for success will greatly improve if you spend enough time and effort on preparing for the application.
