Barbados: Law of Offshore
Barbados first established an offshore banking sector under the Offshore Banking Act 1979 as amended. The Act provided for the licensing of offshore banks, and contained a precise description of offshore banking. The Offshore Banking Act was repealed and replaced by the International Financial Services Act, 2003 which defines international financial service as the business of:
- Receiving foreign funds through:
- Acceptance of foreign money deposits payable on demand, after a fixed period, or after notice;
- Sale or placement of foreign bonds, certificates, notes or other debt obligations, or other foreign securities;
- Any similar activity involving foreign money or foreign securities.
- Using the foreign funds mentioned above to finance:
- Loans, advances and investments; or
- Activities of the person carrying on the business.
Offshore/International Banking also includes the acceptance in trust of:
- Amounts of money in foreign currencies, foreign securities or both;
- Foreign personal or movable properties; and/or
- Real or immovable property outside Barbados from persons resident outside Barbados.
To qualify and obtain a license, an applicant must:
- Obtain the consent of the Minister to incorporate for the purpose of offshore banking. The government imposes a flat annual license fee of US $12,500.
- Show that it is an eligible company or a qualified foreign bank
- State the names and addresses of its director
- Submit a certified copy of its articles of incorporation;
- Give particulars of the proposed banking activity
- Submit the names of shareholders who are residents of Barbados and the number of shares held by them.
- Have at least one of the directors resident in Barbados.
- Minimum capital requirement for residents and non-residents of US $500,000 and US $125,000 respectively.
In February, 2009, Minister of Economic Affairs, Trade, Industry and Commerce, David Estwick said that proposals to introduce a central regulatory body for the banking sector had been given conditional approval from the cabinet and would now be subject to an evaluation, hinting that the regulatory board would be in place before the end of 2009.
Estwick said that a regulatory body would become increasingly necessary with the roll out of the CARICOM Single Market and Economy, observing that increased movement of capital across the region heightened the need for intensified regulation.
“Within CARICOM, there are provisions for cross-border trading and cross-border movement of capital as we give credence to the CSME, in particular, the rules of establishment that allow for the free movement of capital. So, therefore, this requires that we look very closely at the organisational structure that we have in place to ensure that we have a comprehensive, central, regulatory body.”
Pointing out that the financial sector is already subject to adequate regulation, Estwick noted that further regulation of the credit union movement would allow for greater protection of members’ deposits.
“We want to look at a central entity that will be able to deal with a lot of the non-traditional instruments involved in investment and trading that may have caused some of the problems that now exist within the United States,” he explained.
“Thus, we have to be very careful with the systems we put in place under our central financial structure, we must ensure the regulation will facilitate the new instruments of investment and capitalisation,” he concluded.