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The Cayman Islands are a British overseas territory west of the Caribbean Sea, south of Cuba, and northeast of Honduras. The Cayman Islands is one of the most important international financial centres. There was a time when it was highly difficult, and complex, and no straight way to open a bank account for an offshore company. Thanks to several reforms and initiatives, the government and banking institutions have made it relatively easy to open a bank account for offshore companies.
In this blog, we will cover the following topics:
- Why is it a difficult task?
- Banks for your Cayman Islands company
- Benefits of opening a bank account
- How to open a bank account in the Cayman Islands?
- Frequently Asked Questions (FAQs)
Cayman Islands banking reforms:
Unlike other tax-heaven countries, the Cayman Islands adopted several reforms in its banking and governance. This move made the Cayman Islands get removed from the EU blacklist in September 2020. The removal of the Cayman Islands from the EU's list of non-cooperative jurisdictions for tax purposes gave a big boost and encouragement to the financial sector in the Cayman Islands. Many international banks started accepting business accounts to be opened in their banks because of this move since the country itself has adopted several best practices to avoid money laundering events. Yes, this came at a cost of difficulty in bank account opening and offshore company formation in the Cayman Islands for the offshore company founders.
Why is it still a difficult task to open a bank account in the Cayman Islands?
The Cayman Islands' tax heaven policies attract a lot of businesses and high net-worth individuals to form a business in the Cayman Islands and save hundreds of thousands or even millions of tax dollars in tax. Like in any other tax-heavens, people, and businesses prefer to hide their real identities while forming their companies in the Cayman Islands by opting for nominee directorship and nominee shareholding services. This increases the risk of money laundering cases for the country and financial institutions. This has even led to the country being added again to the European Union's AML (Anti-Money Laundering) blacklist in the first quarter of 2022. It's a backlash to the country at the international level.
Again, things started turning against the financial institutions, and the financial institutions have started taking KYC norms at a superior level and conducting deep due diligence before opening a bank account for the applications they receive. It is important to note that unlike other countries such as the United States and India, the Cayman Islands do not have a deposit guarantee scheme. In the event of the bankruptcy of Butterfield Bank (Cayman) Limited, its depositors will not be entitled to any compensation.
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How Vepapu makes your Cayman Islands offshore company journey thousand times easier?
Offshore company formation and management is hard, but not anymore. Vepapu takes care of all complex compliance procedures and helps you in your offshore company formation and bank account opening in the Cayman Islands. Vepapu's support doesn't really end at your company formation, instead, we will accompany you in your company management throughout your journey. We will take care of annual filing procedures, adhere to local laws, and keep you updated with the trend with our team of experts who will always be there to guide you, mentor you, and support you. We will make the complex processes, simple and hassle-free. We believe in transparency.
Let's get back to banking in the Cayman Islands.
What are the bank account options available for offshore companies in the Cayman Islands?
1) Butterfield Bank (Cayman) Limited:
It's a leading independent offshore bank. It's one of the most recommended banking options for offshore company founders in the Cayman Islands. Due to its reliable services and wide coverage, it's one of the most sorted options for bank accounts. Based in many of the world's leading international financial centres, the bank selects financial solutions based on local expertise and global resources. This type of license allows Butterfield Bank (Cayman) Limited to conduct banking and fiduciary business in both domestic and international markets and to serve residents and non-residents alike.
2) Cayman National Bank Ltd.:
Cayman National Corporation has been giving money-related services within the Cayman Islands, locally and globally to our clients for over thirty a long time. The bank offers a range of services including personal accounts, business accounts, credit cards, time deposit accounts, retail banking, online banking, etc. In December 2019, Republic Financial Holdings (Trinidad and Tobago) acquired 74.99% of shares within this bank to increase its offerings and spread its reach.
3) Proven Bank Limited (Formerly Fidelity Bank):
Located in the Cayman Financial Center, it has a strong user base with rich financial tools for its users to enhance their financial solutions. It is a financial services firm incorporated in the Cayman Islands and a part of the Proven Group of enterprises, Proven Bank holds a Category A Bank license under the Bank and Trust Enterprises Act. The bank is able to carry out banking operations both domestically and abroad thanks to its license. It has two locations in Grand Cayman and serves both locals and visitors. It offers financial services including deposit accounts (savings, chequing, and CDs); loans (consumer/personal, mortgage/real estate); credit cards; foreign exchange services; and online and telephone banking.
4) FirstCaribbean International Bank (Cayman) Limited:
Even with a high minimum account balance and security deposit requirements, it's still the most famous option for non-resident offshore company founders in the Cayman Islands. With its significant investment in developing online banking tools, you can apply for a bank account with FirstCaribbean online through their official portal by registering an account with them.
5) RBC Royal Bank (Cayman) Limited:
RBC Royal Bank has a strong presence in tax-free jurisdictions such as Cayman Islands, Bahamas, and Trinidad and Tobago among several others. Due to its stress on offshore banking, it is definitely one of the most sorted banking options out there in the present day. One of the largest banking networks in the Caribbean, RBC Financial Caribbean, was created in June 2008 when the Royal Bank of Canada (RBC) bought RBTT Financial Group (RBTT). RBC is in a position to provide customers with access to a wider network of international financial services with a wider selection of products and a more expansive geographic reach thanks to its more than 110 years of history serving the region.
Benefits of opening a bank account in the Cayman Islands
1) Privacy is the key:
Banking in the Cayman Islands can nevertheless provide a level of privacy that is not possible in your home country, despite the fact that government authorities will have access to information about your financial accounts there (like in the majority of modern countries).
For instance, keeping a bank account abroad places a physical barrier between your account, bank, banker, and potential creditors. Therefore, opening a foreign bank account in an offshore financial hub like the Cayman Islands might be worthwhile whether you're from Canada or the United States.
The Cayman Islands have stringent bank secrecy regulations that guarantee account holders a high level of confidentiality and anonymity. By making it more difficult for creditors or other parties to locate and seize assets, confidentiality can help protect assets.
2) Availability of a variety of financial services
Financial institutions that are registered under the Category A Bank license under the Bank and Trust Enterprises Act can carry out banking operations both domestically and abroad, serving residents and non-residents, offering several industry-standard financial instruments such as retail banking, current accounts, debit cards, credit cards, etc. to all users. The Cayman Islands is a well-known financial hub that provides a variety of financial services, including banking, investment management (made possible by the biggest hedge funds and private equity firms in the world), fiduciary services, trusts, insurance, real estate, property management, and many more.
3) Stable governmental and economic environment
For several years, the Cayman Islands government has been very stable and strong. The region's economy is diversified, with a thriving tourism sector and a robust financial services sector. Incorporating in the region would be a wise choice whether your business is domestic or offshore because the Cayman Islands' qualities as a jurisdiction generally offer a predictable and dependable environment for international commerce and investment.
How to open a bank account in the Cayman Islands:
Step 1. Select the best and ideal bank
It goes without saying that choose the best bank for your offshore banking needs. Some banks are really mischievous while others do know how to conduct banking practices to ensure the benefit to its users. Some banks support non-residents while others don't. Some banks require very high-security deposits while others require very less. Some banks work with only giant corporations while others also support individual founders. To find out which Cayman Islands bank best satisfies your demands and expectations, research and compare the various Cayman Islands banks.
Step 2. Reach out to the banks and discuss terms
These banks generally have set standard terms but are open to changes if your company and banking needs suit their criteria and your business seems very safe and alluring to them. You should take a call and ask for terms negotiations that enhance your position in financial terms. You can negotiate on minimum balance requirements, bank account opening fees, bank account maintenance fees, bank account security deposits, transfer limits, receiving limits, etc.
Stocks, mutual funds, and bonds, which are sometimes linked to higher professional costs, could be offered in a Cayman bank account that is managed for you. When properly used, they can, however, yield a substantially higher return.
Step 3. Collect and organise the required documents
Each bank will have its own required set of documents to open a bank account. Some banks follow rigid KYC (Know-Your-Customer) norms while others might be less-strict in terms of the number and/or types of documents. Residents of the Cayman Islands might need fewer documents to create a bank account because the government might already have access to their information. Additionally, you can be eligible for goods and services that are only offered to citizens.
Non-residents may open accounts if they have connections to the islands (personal, commercial, or residential), even if they are not physically present. However, you may be subject to stricter requirements, higher costs, and additional documentation and operation tracking.
The common set of documents required to open a bank account in the Cayman Islands is as follows:
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1) A valid passport or other kind of government-issued photo identification is required as identification.
2) A utility bill that is no older than three months or other documents that attest to your residential address serve as proof of residency.
3) Bank references are records from your current bank or other financial institution that detail your financial history.
4) Origin of funds: You might need to disclose information regarding the sources of funds you intend to deposit into the account.
5) Depending on the bank and the type of account, the minimum initial deposit ranges from a few thousand to a hundred thousand dollars for a respectable one.
You are likely to be subject to additional rules as a foreigner, such as those pertaining to know-your-customer (KYC) and anti-money laundering (AML) standards.
Step 4. Initiate bank account opening either remotely or in-person
Most banks allow you to open a bank account without any physical visits, thanks to the Internet. But when it comes to offshore company founders from foreign countries, banks would definitely require you to make a physical visit to the bank's branch in the Cayman Islands. You might have to plan your transportation to the jurisdiction. It would be very beneficial to speak with the bank immediately right now to confirm their current account opening procedures!
Step 5. Fund your account and start using
Fund your bank account with the minimum balance amount and security deposit amount. This gives you a head-start to start using your bank account as banks will start allowing you to make transactions. You will normally need to make an initial deposit to fund the account after it is opened. The initial deposit will differ depending on your bank and account type. The bank will complete the account activation process once you have provided all the necessary information and funded the account. After that, you can access the account and start transacting.
Frequently Asked Questions (FAQs)
Can non-residents open a bank account in the Cayman Islands?
It is feasible to open an account as a non-resident, but it is likely that you will need to present income statements, tax records, and a few other documents. Additionally, you will likely have limitations on how you may use your accounts and the amount of money that can be deposited.
What is the initial deposit to open a bank account?
The initial deposit to open a bank account in the Cayman Islands ranges between $5000 to $100,000. The initial security deposit is dependent on your business's trust factor, safety, business size, business nature, and several others.
Is it illegal to open a bank account for your offshore company in the Cayman Islands?
Just like any other kind of account, provided that it is only used for legitimate purposes. Banks consider this very seriously and consider several factors before giving you access to their financial systems. If you get a bank account, be sure to legitimately use it and make the best use of it.
Can I withdraw money from the Cayman Islands bank account?
Yes, after all, it is your money that is legally kept in safe custody with the bank in the Cayman Islands. While banks put in place several limitations to the amount you withdraw in one go, it is for everyone's safety and protection of interests of all the stakeholders. Simple debit cards are offered by the majority of Cayman Island banks, although there may be fees associated with using them.
